Investment Proposition and Philosophy

 

Real Returns Optimised within a Risk Framework

Our investment philosophy aims to meet the twin objectives of capital preservation and capital appreciation over the long term, through an investment strategy that considers diverse sources of return while being risk aware. The outcome of this process aims to deliver real returns which are commensurate with your risk appetite.

Our fundamental aim is to maximise risk adjusted returns for our clients and this is done both at asset class level in the case of actively managed funds and at asset allocation level in the case of multi asset funds. We follow a consistent investment process based on the conviction that returns are obtained through a combination of the correct strategic asset allocation, tactical asset selection and stock selection. We value each asset class to identify mispricing opportunities which can be captured either via stock selection within an asset class or by our asset allocation process when comparing across asset classes.

Our team-driven and prudent investment process is applied across all our investment decisions and across all funds with individual accountability given to the investment managers managing your money. We follow a systematic, fundamentally based approach to investing which allows us to avoid behavioural biases.

 

Top Down and Bottom Up

We believe that asset prices are driven both by macro factors (top down) and bottom up fundamentals. By analysing local and global economic data, we identify trends that will influence asset prices. 

Our investment approach is built on three principles:

 
Macro

We are top-down investors who use macro-economic factors to identify trends that inform our investment decisions. We use a range of market data with a number of proprietary forecasts from one of the largest team of economists in the country.

Quality

We invest in quality assets. By quality, we mean companies that have a moat and that can deliver superior returns compared to their peers over the long term. High quality companies perform better through the cycle. By taking a long-term view and investing in cash generating companies which can generate returns above their cost of capital sustainably, these companies can deliver superior returns compared to their peers. When defining quality, we focus on three main factors: high returns compared to peers and their cost of capital, strong balance sheet and strong operational cash flow generation. We prefer market leaders with strong management operating in industries with high barriers to entry and structural growth. 

Valuation

We rely on stock and asset class valuation when making active investment decisions. We employ asset class specialists onshore and offshore to be able to provide the best possible understanding of specific asset classes. The bottom up valuation assists in the asset allocation decision making. 

By combining a top down view and bottom up valuations, we are able to determine the best possible combination of asset classes to deliver on your real return targets, while optimising for risk. We also account for ESG (Environmental, Social and Governance) factors when analysing companies to evaluate the sustainability of their returns in the long term. 

Responsible, Sustainable Investing

Our investment decisions consider a wide range of factors that may affect the risk and return profile of the investments we make, now and in the future. Our long-term success is not measured in investment performance alone, but also on the impact on society and the environment.

We recognise that responsible companies ought to have good governance processes, effective risk management and compliance functions and stakeholder engagement. They prepare for changes in their operating environment, from shifts in public opinion to the challenges of resource scarcity and the impact of climate change.

Incorporating environmental, social and governance factors into our investment and ownership decisions supports the pursuit of superior risk-adjusted returns for our clients.

Ashburton Investments is a participant in the Association for Savings and Investment South Africa’s Responsible Investing sub-committee and fully endorse the Codes for Responsible Investing South Africa. We are a signatory to the United Nations Principles for Responsible Investment (UNPRI).