ARTICLES

We had a flat month in most of our longer-term portfolios in the face of weak markets in December, while our shorter-term portfolios made gains. This was a good result in part due to our conviction precious metals position (which is now being more widely adopted) and low equity weighting.  We have demonstrated better capital preservation in recent months than many, as we are emphasizing genuine diversification at a portfolio level and keeping our positioning conservative in what we still believe to be a risky and uncertain market for investing.  

We continue to believe that over the medium-term inflation pressures will remain volatile despite receding for now, while real economic growth will remain weak given a relative paucity of productive investment and large debt loads for many economies.  We are still very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity.  We aim to remain astute and flexible and highly risk aware in an ever changing and potentially highly challenging investment climate.

2023 sees the risk of an economic and earnings recession and its attendant impact on markets as persistent central bank tightening and structural challenges impact markets with a lag.

Given our outlook, we see the need for precious metals and selective commodities such as energy and resources allocations in portfolios and a more diversified approach than what is commonly relied upon by our industry.  We will remain fleet of foot, and look at judiciously increasing equity and credit exposures sometime in 2023 if we ascertain a more favourable valuation and outlook for these assets.  Currently capital preservation and prudent diversification is most important in our view. 

Our Cash Plus portfolio is defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter term time periods than our longer duration portfolios – while being designed for shorter term liquidity needs.    

Our more medium and longer term orientated portfolios target returns and manage risk with longer term time periods in mind.  The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame through dynamic asset allocation.  There is significant scope here to increase equity positioning in coming months as opportunities present themselves but we are relatively conservatively positioned for now given our outlook.

Dynamic Asset’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we believe we are much more forward-looking than most diversified managers which tend to be much more biased to industry peers and what hashappened (for example, by relying more upon static weightings, past returns, correlations and volatility - which we believe are markedly different from today’s conditions). 

We are better diversified than many portfolios because we hold meaningful weightings to alternatives and ‘hard assets’ in different guises, and expect these to provide valuable return and risk diversification over time in our portfolio context, even if they are occasionally volatile individually.  We believe large and unsustainable debt burdens, demographics, poor government policies and market interference continue to strangle long term real productivity growth for much of the world economy.  This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. 

We are very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity.  The increasing risk of major conflicts give further credence to our concerns.  We think investors are best served by researching thoroughly and thinking more broadly and outside the box in order to better protect and grow their capital, including potentially greater use of selectively chosen value adding liquid alternatives, along with precious metals exposures and greater weightings to real asset proxies. 

We aim to remain astute and flexible and highly risk aware in an ever changing and potentially highly challenging investment climate, and will continue to look to take advantage of the volatility, uncertainty and fear to add value to the portfolios through time.

Our portfolios were all very positive for the month and have demonstrated better capital preservation in recent months than many, as we are emphasising genuine diversification at a portfolio level and keeping our positioning conservative in what we still believe to be a bear market with further downside risk into 2023.

We continue to believe that over the medium-term, inflation pressures will remain volatile, while real economic growth will remain weak given a relative paucity of productive investment and large debt loads for many economies.  We are still very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity.  We aim to remain astute, flexible and highly risk-aware in an ever-changing and potentially highly challenging investment climate.

2023 sees the risk of an economic and earnings recession and its attendant impact on markets as persistent central bank tightening and structural challenges impact markets with a lag.

Given our outlook, we see the need for precious metals and selective commodities such as energy and resources allocations in portfolios and a more diversified approach than what is commonly relied upon by our industry.  We will look at judiciously increasing equity and credit exposures sometime in 2023 when we assess a more favourable valuation and outlook.  Currently, capital preservation and prudent diversification is more important.

Our Cash Plus portfolio is defensively positioned, while our Short Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios – while being designed for shorter-term liquidity needs.    

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind.  The Wealth Builder’s larger risk tolerance gives us the most leeway to back higher-risk assets based on our insights and research while still managing risk prudently over a longer-term time frame through dynamic asset allocation.  In our longer-dated portfolios, we are relatively conservatively positioned for now, which gives us significant scope to increase equity positioning in coming months as opportunities present themselves.

Dynamic Asset’s portfolios are designed to be diversified but focus only on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons.  This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.  In this way, we believe we are much more forward-looking than most diversified managers who tend to be much more focused on what has happened and what industry peers are doing, which is to typically build portfolio asset allocations by relying more upon past returns, correlations and volatility - which we believe are under threat as conditions are markedly different today from the past 10-20-30 years.  

We are better diversified than most typical portfolios by holding meaningful weightings to alternatives and ‘hard assets’ in different guises and expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile individually.  We believe large and unsustainable debt burdens, demographics, poor government policies and market interference continue to strangle long-term real productivity growth for much of the world economy.  This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent.  

We are very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity.  The increasing risk of major conflicts gives further credence to our concerns.  We think investors are best served by researching thoroughly and thinking more broadly and outside the box in order to better protect and grow their capital, including potentially greater use of selectively chosen value-adding liquid alternatives, along with precious metals exposures and greater weightings to real asset proxies.  

We aim to remain astute, flexible and highly risk-aware in an ever-changing and potentially highly challenging investment climate, and will continue to look to take advantage of the volatility, uncertainty and fear to add value to the portfolios through time.

Our portfolios were mostly positive for the month and have demonstrated better capital preservation in recent months than many, as we emphasise genuine diversification at a portfolio level in an uncertain world rather than one-way bets.

We continue to believe that over the medium-term inflation pressures will remain volatile, while real economic growth will remain weak given a relative paucity of productive investment and large debt loads for many economies. We are still very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. We aim to remain astute and flexible and highly risk-aware in an ever-changing and potentially highly challenging investment climate.

Given our outlook, we see the need for precious metals and selective commodities such as energy and resources allocations in portfolios and a more diversified approach than what is commonly relied upon by our industry. We will be willing to look at judiciously increasing equity and credit exposures on a hard landing and cheaper valuations, should the opportunity arise, but are still emphasizing capital preservation and prudent diversification currently given the high risk of global recession and central banks continuing to tighten into a rapidly slowing economy, i.e. central banks risk yet another major policy mistake in the coming month or two which may damage economic growth and asset pricing.

Our Cash Plus portfolio is defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios – being designed for shorter-term liquidity needs.    

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind. The Wealth Builder’s larger risk tolerance gives us most leeway to back higher-risk assets based on our insights and research, while still managing risk prudently over a longer-term time frame. There is scope here to increase equity positioning in coming months as opportunities present themselves.

Dynamic Asset’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons. This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed. In this way, we believe we are much more forward-looking than most diversified managers, who tend to be much more biased to what has happened (for example, by relying more upon past correlations and volatility - which may be markedly different from the future). 

We are better diversified than many portfolios as we hold meaningful weightings to ‘hard assets’ in different guises and alternatives, and expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile individually. We believe large and unsustainable debt burdens, demographics, poor government policies and market interference continue to strangle long-term real productivity growth for much of the economy. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. 

We are very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. The increasing risk of major conflicts give further credence to our concerns. We think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of selectively chosen value-adding liquid alternatives, along with precious metals exposures and greater weightings to real asset proxies. 

We aim to remain astute, flexible and highly risk-aware in an ever-changing and potentially highly challenging investment climate, and will continue to look to take advantage of the volatility and uncertainty and fear to add value to the portfolios through time.

Our portfolios had an excellent month in the context of profound weakness in asset markets globally. It was pleasing to see so many of our positions coming together to protect and add value to our portfolios as a whole, while we successfully added to this with our dynamic asset allocation having anticipated and written about how weakness was likely in the month of September.

We continue to believe that over the medium-term inflation pressures will remain somewhat elevated albeit volatile, while real economic growth will remain weak given a relative paucity of productive investment and large debt loads for many economies. We are still very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. We aim to remain astute, flexible and highly risk-aware in an ever-changing and potentially highly challenging investment climate. We continue to look to diversify the portfolios where appropriate and sensible. 

Given our outlook, we see the need for precious metals and selective commodities such as energy and resources allocations in portfolios, and a more diversified approach than what has commonly relied upon by our industry historically. We will be willing to look at judiciously increasing risk asset exposure on any further meaningful sell-off, but are currently positioning the portfolios to continue to protect capital in the event of further equity market weakness.

Our Cash Plus portfolio is defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios – while being designed for shorter-term liquidity needs.    

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind. The Wealth Builder’s larger risk tolerance gives us the most leeway to back higher-risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame. There is scope here to increase equity positioning in coming months as opportunities present themselves.

Dynamic Asset’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons. This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed. In this way, we believe we are much more forward-looking than most diversified managers, who tend to be much more biased to what has happened (for example, by relying more upon past correlations and volatility - which may be markedly different from the future). 

We are better positioned for persistent inflationary pressures and geopolitical frictions than many over the medium-term as we hold meaningful weightings to ‘hard assets’ in different guises, and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. We believe large and unsustainable debt burdens, demographics, poor government policies and market interference continue to strangle long-term real productivity growth for much of the economy. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. 

We are very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. Wars and recent destruction of crucial infrastructure such as pipelines give further credence to our concerns. We think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of selectively chosen value-adding liquid alternatives, along with precious metals exposures and greater weightings to real asset proxies. 

We aim to remain astute and flexible and highly risk-aware in an ever-changing and potentially highly challenging investment climate, and will continue to look to take advantage of the volatility and uncertainty and fear to add value to the portfolios through time.

Our portfolios had a good month despite weakness in equity and bond markets generally. It was pleasing to see our alternatives and commodities and resources positions contributing positively.

We continue to believe that over the medium-term inflation pressures will remain somewhat elevated, albeit volatile, while real economic growth will remain weak given a relative paucity of productive investment and large debt loads for many economies. Hence, we see the need for precious metals and selective commodities such as energy and resources allocations in portfolios. We will be willing to look at judiciously increasing risk asset exposure on any further meaningful sell-off.

We are still very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. We aim to remain astute and flexible, and highly risk-aware in an ever-changing and potentially highly challenging investment climate. We continue to look to diversify the portfolios where appropriate and sensible. 

Our Cash Plus portfolio is defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios – while being designed for shorter-term liquidity needs.    

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind. The Wealth Builder’s larger risk tolerance gives us the most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame. There is scope here to increase equity positioning in the coming months as opportunities present themselves.

Dynamic Asset’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons. This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed. In this way, we believe we are much more forward-looking than most diversified managers, which tend to be much more biased to what has happened (for example, by relying more upon past correlations and volatility - which may be markedly different from the future). 

We are better positioned for persistent inflationary pressures than many over the medium term as we hold meaningful weightings to ‘hard assets’ in different guises, and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. We believe large and unsustainable debt burdens, demographics, poor government policies and market interference continue to strangle long-term real productivity growth for much of the economy. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. 

We are very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. We think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of selectively chosen value-adding liquid alternatives, along with precious metals exposures and greater weightings to real asset proxies. 

We aim to remain astute and flexible, and highly risk-aware in an ever-changing and potentially highly challenging investment climate. We continue to look to diversify the portfolios where appropriate and sensible.

Our portfolios posted modest returns over the month as low equity allocations kept returns modest in the face of rallying equity markets. The market is fluctuating between inflation and growth concerns as the short-term outlook remains unknown.

We continue to believe that over the medium-term, inflation pressures will likely remain somewhat elevated compared with recent decades and that financial repression will be the preferred path forward for central banks (keeping yields lowish and positive inflation and asset pricing). This is because the alternative of a deflationary collapse is highly undesirable to policymakers. We expect it won’t be long (weeks or months) until policymakers signal a less hawkish stance towards markets feeling forced to do so in the face of political pressure, slowing economies and/or further economic crises.   Hence, we see the need for precious metals and selective commodities such as energy and resources allocations in portfolios. We are more interested in looking to increase risk asset positioning judiciously on any sell-off than selling after losses.

Our Cash Plus portfolio is defensively positioned, while our Short Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios and for shorter-term liquidity needs.    

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind. The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame. There is scope here to increase equity positioning in the coming months as opportunities present themselves.

Dynamic Asset’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons. This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed. In this way, we believe we are much more forward-looking than most diversified managers, which tend to be much more biased to what has happened (for example, by relying more upon past correlations and volatility - which may be markedly different from the future). 

We are better positioned for inflation than many over the medium term as we hold meaningful weightings to ‘hard assets’ in different guises, and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. We believe large and unsustainable debt burdens, demographics, poor government policies and market interference continue to strangle long-term real productivity growth for much of the economy. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. 

We are very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. We think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of selectively chosen value-adding liquid alternatives, along with precious metals exposures and greater weightings to real asset proxies. 

We aim to remain astute and flexible, and highly risk aware in an ever-changing and potentially highly challenging investment climate. We continue to look to diversify the portfolios where appropriate and sensible.

Our portfolios declined over the month as stock markets and commodities both sold off aggressively. The market has become obsessed with recessionary concerns as central bank tightening remains aggressive into a slowing economy.

We continue to believe that over the medium-term, inflation pressures will remain somewhat elevated compared with recent decades and that financial repression will be the preferred path forward for central banks (keeping yields lowish and positive inflation and asset pricing). This is because the alternative of a deflationary collapse is highly undesirable to policy makers. We expect it won’t be long (weeks or months) until policy makers expose a less hawkish stance towards markets being forced to do so in the face of slowing economies and/or further economic crises. Hence, we see the need for precious metals and selective commodities such as energy and resources allocations in portfolios. We are more interested in looking to increase risk asset positioning judiciously on any sell-off than selling after losses.

Our Cash Plus portfolio is defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter term time periods than our longer duration portfolios and for shorter term liquidity needs.    

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind. The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame. There is scope here to increase equity positioning in coming months as opportunities present themselves.

Dynamic Asset’s portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons. This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed. In this way, we believe we are much more forward-looking than most diversified managers, who tend to be much more biased to what has happened (for example, by relying more upon past correlations and volatility - which may be markedly different from the future). 

We are better positioned for inflation than many over the medium term as we hold meaningful weightings to ‘hard assets’ in different guises, and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. We believe large and unsustainable debt burdens, demographics, poor government policies and market interference continue to strangle long-term real productivity growth for much of the economy. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. 

We are very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. We think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of selectively chosen value-adding liquid alternatives, along with precious metals exposures and greater weightings to real asset proxies. 

We aim to remain astute, flexible and highly risk aware in an ever-changing and potentially highly challenging investment climate. We continue to look to diversify the portfolios where appropriate and sensible.

Our portfolios had some losses over the month as both bond and stock markets globally sold off. Inflationary concerns have the attention of the market with interest rate concerns front of mind. Central bank policy now poses a major risk to markets with the FED and other central banks reacting to inflation.

We remain concerned about the medium-term market and economic prospects, including the significant risk of inflationary pressures persisting, possible Central Bank policy mistakes, stagflation/recession, heightened geopolitical risks with possible further deterioration, ongoing challenges to real economic growth and deteriorating corporate profitability. Despite this, we still see elevated market valuations in part and are hence participating very selectively in risk assets. The greatest medium-term challenge for all portfolios is achieving returns without suffering unduly as markets derate with the reality of our fundamentals - challenged political and economic circumstances amidst high market valuations. We are seeking to mitigate risks such as these and inflationary pressures in part by avoiding the worst of the market exuberance and with meaningful alternatives, precious metals and selective commodities and resources allocations. We continue to see the need to have lower market risks, greater diversification and strong active management to produce acceptable risk/return trade-offs. 

Our Cash Plus portfolio is defensively positioned, while our Short Term portfolio is relatively defensive, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios and for shorter-term liquidity needs.   

Our more medium and longer-term orientated portfolios target returns and manage risk with longer-term time periods in mind. The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame. Nonetheless, even here, we are being cautious currently and have lowered market exposures in recent months.

Our portfolios are designed to be diversified, but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons. This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed. In this way, we believe we are much more forward-looking than a historical SAA approach which tends to be much more biased to what has happened (for example, by relying more upon past correlations and volatility - which may be markedly different from the future). Although past performance is not indicative of future performance, our highly competitive results to date have provided some validation of our approach historically.

We are very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. We think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value-adding alternatives (selectively chosen), along with precious metals exposures and greater weightings to real assets. We are better positioned for inflation than many over the medium-term as we hold meaningful weightings to ‘hard assets’ in different guises, and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. 

We believe large and unsustainable debt burdens, demographics, poor government policies and market interference continue to strangle long-term real productivity growth for much of the economy. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. 

We aim to remain astute and flexible, and highly risk-aware in an ever-changing and potentially highly challenging investment climate as we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

Our shorter-dated portfolios were down for the month as bond markets sold-off aggressively; however, our longer-dated portfolios performed strongly, in an absolute and relative sense, during difficult market conditions.

Supply chain issues caused by war and deglobalisation further stoked inflationary concerns have the attention of the market. Central bank policy now poses a major risk to markets, with the FED feeling forced to finally react to inflationary risks.

We remain concerned about the medium-term market and economic prospects, including the risk of inflationary pressures persisting, stagflation leading to possible recession and deflation. Further deterioration in geopolitical risks and escalating conflicts are significant concerns and exacerbate the ongoing challenges to real growth, sustainable profitability, and elevated market valuations. We are seeking to mitigate risks such as these in part by participating selectively in risk assets and avoiding the worst of the market exuberance, but also through holding meaningful alternative allocations, selective commodities and resources allocations, all of which have been very helpful of late. We continue to see the need to have lower market risks, greater diversification and strong active management to produce acceptable risk/return trade-offs. 

Overall, Dynamic Asset’s portfolios are designed to manage risk through sensible diversification where we focus on investing into a range of assets where the return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons. In this way, we are much more forward-looking than the typical risk profile / SAA manager, which tends to be much more biased to what has happened historically, but which may be markedly different from the future.

Our Cash Plus and Short-Term portfolios are defensively positioned, with both designed to be less volatile over shorter-term time periods than our longer duration portfolios to help meet shorter-term liquidity needs.    

Our medium and longer-term portfolios target CPI+ returns, which means we must participate in order to generate returns, but we do so judiciously as we manage risk with those longer-term time periods in mind. The Wealth Builder’s larger risk tolerance gives us most leeway to back higher risk assets on the basis of our insights and research. Nonetheless, even here, we are being cautious currently.

We are better positioned for inflation than most as we hold meaningful weightings to ‘hard assets’ in different guises. We continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. We believe large and unsustainable debt burdens, poor government policies, and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth has markedly improved for now. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.

We are very concerned by geopolitical risks and the massive challenges to the previous period of globalisation and peaceful prosperity. We think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value-adding alternatives (selectively chosen), along with precious metals exposures and greater weightings to real assets. We aim to remain astute and flexible, and highly risk-aware in an ever-changing and potentially highly challenging investment climate.

Our portfolios were down modestly over the month despite the aggressive equity market sell-off with the invasion of Ukraine. This reflects our current defensive positioning to help protect capital.

Inflationary concerns also have the attention of the market with supply chain issues becoming more acute, particularly in areas affected by war, and wages pressures growing. Central bank policy now poses a major risk to markets with the FED perhaps feeling ‘forced’ to finally react to inflationary risks.

We remain concerned about medium term market and economic prospects including the risk of stagflation, inflationary pressures persisting longer than expected, recession and then deflation, geopolitical risks, ongoing challenges to real growth impacting sustainable profitability, and elevated market valuations. We are therefore participating very selectively in risk assets. The greatest medium-term challenge for any portfolio manager is achieving returns without suffering unduly as the reality of our fundamentals - challenged economic circumstances amidst high market valuations - becomes an issue again leading to potentially significant selloffs in markets. We are seeking to mitigate risks such as these by avoiding the worst of the market exuberance, diversifying with meaningful alternatives and selective commodities and resources allocations, all of which have been very helpful in recent months. We continue to see the need to have lower equity market risk, greater diversification and strong active management to produce acceptable risk/return trade-offs.

Dynamic Asset’s portfolios are designed to be diversified but focus on investing where return prospects are assessed as capable of meeting the return objectives of the funds over their respective time horizons. This diversification provides useful mitigation against risk over the appropriate time period consistent with each portfolio’s objective, while our active assessment of risk and return can target capital to where it appears most prospectively and appropriately placed.

Our Cash Plus portfolio is very defensively positioned, while our Short-Term portfolio is relatively defensive, with both designed to be less volatile over shorter term time periods than our longer duration portfolios.  

Our more medium and longer-term orientated portfolios target returns and manage risk with longer term time periods in mind. The Wealth Builder’s larger risk tolerance gives us the most leeway to back higher risk assets on the basis of our insights and research, while still managing risk prudently over a longer-term time frame.

We are better positioned for inflation than most as we hold meaningful weightings to ‘hard assets’ in different guises and continue to expect these to provide valuable return and risk contributions over time, even if they are occasionally volatile. We believe large and unsustainable debt burdens, poor government policies and market interference continue to strangle real productivity growth for much of the economy, albeit nominal growth has markedly improved for now. This potentially bodes relatively poorly for traditional risk assets and index investing, upon which most traditional investment strategies and super funds are heavily dependent. In this way, we are much more forward-looking than a historical SAA approach which tends to be much more biased to what has happened (for example, by relying more upon past correlations and volatility - which may be markedly different from the future). We think investors are best served by thinking outside the box in order to better protect and grow their capital, including potentially greater use of liquid value adding alternatives (selectively chosen), along with precious metals exposures and greater weightings to real assets. Furthermore, we think good active managers will better be able to differentiate themselves and add value over the next few years, in part by being more nimble and able to differentiate between assets based upon their prospects in different economic circumstances and very disparate valuations.