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Our investment philosophy

Our Investment Philosophy is based on academic research from some of the top investment researchers in the field, including Nobel prize-winning Economic Scientist, Eugene Fama.

Our approach to investing is rooted in four key principles:

1. Asset allocation

One of the most important investment decisions we make is what assets to invest your money in. Asset allocation is the starting point for any investment strategy.

We subscribe to Modern Portfolio Theory (MPT) – a mathematical quantification which demonstrates the benefits of diversification. We’re happy to go into lots more detail if mathematical quantification is your thing, but if it isn’t, we can simply summarise it in the following way:

By combining different types of assets, your collective investments will have a lower level of risk than if your money was held in a single pot.

This works because different assets may move independently of each other. For example, during a recession, equities usually fall in value, but bonds often rise; therefore, a diversified portfolio will be less volatile than one made up exclusively of equity securities. That’s why five of our seven portfolios have both bonds and equities in them.

2. Cost

We believe that cost is a critical factor in selecting a product or investment fund and therefore we select companies with good financial strength and levels of service, as well as funds that are low cost.

3. Tracking the Market

We believe it is pointless to search for undervalued stocks or to try to predict trends in the market through either fundamental or technical analysis. We believe in passive investment.

Tracking the market, as passive investing is otherwise known, is a style of investment management in which a fund’s performance aims to mirror a market index. It works in conjunction with Modern Portfolio Theory and the Efficient Market Hypothesis, which sees individual stock-picking and tactical asset allocation as futile. Efficient Market Hypothesis states that current prices incorporate all available information and expectations. ‘Mis-pricings’ can occur but not in a predictable pattern that can lead to consistent out-performance.

So instead, we concentrate on strategic asset allocation to arrive at the right level of risk for our clients. These funds tend to have lower charges than active portfolios since they simply replicate the index, and the risk of significant under-performance should be limited.

4. Timing the market

Ask five different economists what they think is going to happen to the markets in the next year and they will give you five different answers, because, who knows? None of them have a crystal ball, so cannot see what will happen and as recent events have shown us, anything can happen.

If you try and time the market, you could miss out on the best days for investment. We therefore advocate for ‘time in the market’ rather than ‘timing the market’.

5. Be good to the environment

We’re all aware of the need to care more about the planet to slow down global warming. How we invest our money can have a big effect on how we help to protect our planet. We can do this by investing in companies that are not only good for the world but are also treating their employees and supply chains well. Recently, more client interest has been shown in investing this way too, and we believe that everyone should have ESG (Environmental, Social, Governance) funds in their portfolios to help do their bit.

There are plenty of innovative companies out there that are working for the good of the planet. You can now invest in great companies, avoid the “bad”, and have the potential for great returns.

Investment Portfolios

At Blueberry Financial we have seven investment portfolios for our clients that are made up of Dimensional and EQ funds. They range from Portfolio 1 which is low risk and is all invested in fixed interest and Portfolio 7 which is high risk and all in equities.

The dominant determinant of long-term, real-life financial outcomes is not investment performance. It is investors’ behaviour.

Nick Murray

Our investment partners

We use leading fund advisors Dimensional and fund managers EQ to help you achieve your investment goals.

Why Dimensional?

Dimensional Fund Advisors is a leading global investment firm. They have been translating great financial research and ideas into practical investment solutions for clients since 1981.

Rather than attempting to predict the future or outguess others, Dimensional draw information about expected returns from the market itself — leveraging the collective knowledge of its millions of buyers and sellers to set security prices. Trusting markets to do what they do best — drive information into prices — means they can spend time using their strong links with the academic community to interpret the research, design and manage portfolios, and serve clients.

They take a systematic, consistent approach to investing that investors can understand and stick with, even in challenging market times.

Rather than attempting to predict the future or outguess others, Dimensional draw information about expected returns from the market itself — leveraging the collective knowledge of its millions of buyers and sellers to set security prices. Trusting markets to do what they do best — drive information into prices — means they can spend time using their strong links with the academic community to interpret the research, design and manage portfolios, and serve clients.

They take a systematic, consistent approach to investing that investors can understand and stick with, even in challenging market times.

Why EQ Investors?

EQ Investors is a discretionary fund manager that invests their clients’ money in ESG solutions.

EQ Investors is for clients who want to maximise their impact and returns and invest to solve social and environmental problems.

Their strategy focuses on selecting companies that have developed innovative solutions to the world’s greatest environmental and societal challenges, such as climate change, access to education or clean water.

It is estimated that we need $5-7 trillion of additional investments every year to tackle the most pressing issues, called the UN Sustainable Development Goals. As a result, impact investments offer significant long-term return growth potential.

We believe that to have a positive impact with your ESG portfolio, you need to be active. Therefore, we use EQ Investors Positive Impact Portfolios, which are active and not index tracking, for this very reason.

A positive impact approach focuses on the faster-growing part of the markets and, as such, can offer attractive diversification benefits to a more traditionally managed portfolio.

If you have any questions about our approach to investing and how we manage your money, please get in touch.

 

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