How we add value
Our value-adding activities fall into three broad strategies. Each is anchored to one or more of our investment beliefs, and they are all consistent with the advantages we gain from being a long-term investor.
Strategic Tilting is a value-adding strategy where we periodically change (or “tilt”) our market exposures away from the Reference Portfolio, in the expectation of improving the Fund’s performance.
Tilts are made by increasing or decreasing the Fund’s exposure to asset classes or currencies, based on our assessment of fundamental market value. Tilting is a well-planned programme integrated into our broader long-term, growth-oriented investment strategy.
Capture active returns
This refers to the broad class of activities undertaken because we believe that, over the long-term, they will produce better returns than what is possible from the Reference Portfolio. This can involve investing in asset classes not in the Reference Portfolio (such as timber); or investing in asset classes that are in the Reference Portfolio, but by doing so actively (such as through an investment manager) rather than passively.
'Completing' the portfolio refers to our activities in getting cost-effective access to investments and managing them efficiently when we have made them. An example of this includes how we execute an investment in equities over time: a sizeable investment in a small market can be quickly noticed by other players and prices can increase rapidly, involving extra cost if you are a buyer. Executing the trade skilfully can minimise or avoid this extra cost.