How we invest

We want your investments to do well and for you to be comfortable with the ups and downs along the way.

No one knows what the future holds but history tells us that the best investment today is unlikely to be the best investment tomorrow. So how do we invest our clients’ money and consistently generate good long-term outcomes? We have two key principles that form the basis of how we invest.

Time in the market

We need to make sure that you remain comfortable with fluctuations in the value of your portfolio: there will inevitably be times when investments go down in value. Investors who can ride out the bumps in the road are the ones who do best over the longer term, so we want to make sure the road is not too rough for you.

Diversification

We remind ourselves regularly that ‘we don’t know what we don’t know’. This means there will be risks and opportunities in the future that we have not even thought about. We can’t avoid risks we don’t know about and we need to retain a healthy humility in our assessment of our own ability to predict the investment markets. We do this by diversifying our clients’ portfolios – spreading the risk we are taking for our clients across different investment types, different geographies and different investment areas.

Asset allocation

The main assets we use to construct investment portfolios are equity, fixed interest, property, alternative investments and cash.

All investments (other than cash) tend to go up and down in value. But, because different assets tend to go up and down at different times, blending the assets together in a portfolio tends to provide a less bumpy investment return than putting all your eggs in one basket.

‘Asset allocation’ is what we call the process of deciding what proportion of your investment we should put in which type of asset. We choose some assets because they have tended to provide higher returns but with more ups and downs (like equities). We also keep some of your money in assets that usually provide fewer ups and downs but also tend to provide lower returns (like fixed interest).

When we get the balance of investment risk and return right (and keep it that way), it helps to keep our clients comfortable with the ups and downs in the value of their portfolios, meaning they have the time in the market to see good long-term outcomes.

Investment selection

When we have decided on an appropriate asset allocation, remembering that ‘we don’t know what we don’t know’, we want to further diversify our clients’ portfolios.

We don’t believe anyone has sufficient knowledge to be an expert in every investment market around the world. But there are lots of very good investment managers, each with a speciality in a particular type of investment in a particular market. We use pooled investments, commonly known as ‘funds’ to access these specialist investment managers and their dedicated research teams. Pooling investments within funds allows the costs of these services to be spread across all the investors.

When we invest our clients’ money in a fund, we are trusting the investment manager to use their specialist knowledge to pick the right underlying investments within the fund. It is the investment manager’s job to hold, buy or sell those underlying investments as they see fit. Although it varies by asset class, funds are usually invested across thirty to one hundred underlying investments (and sometimes more).

With lots of different areas to invest in, we construct most of our clients’ portfolios with around twenty funds. Where possible, we try to avoid investing too much in a single fund or fund provider, which helps to spread the risk.

The investment committee at Rouse Limited is independent. We think this is really important, as it means we can select any fund from any investment manager we believe has the ability to provide a good return in their area of speciality for our clients. We work very hard to make sure we choose the right funds for our clients. We also know that things change, so we keep reviewing the funds in our portfolios to make sure they stay right for our clients.

For more details about our ongoing portfolio management services, see Our investment approach page or contact one of our financial advisers.