Breaking from the pack in asset allocation

Nicholas Grove  |  04/07/2016Text size  Decrease  Increase  |  

Nicholas Grove: I'm Nick Grove for Morningstar at the Morningstar Individual Investor Conference in 2016 and I'm joined by Andrew Lill.

Andrew, you and your team, how does your approach to asset allocation differ from the rest of the pack?

Andrew Lill: Nick, we are valuation-driven investors. We invest for the longer term. And basically, we don't pay any attention to other peer groups or what the strategic asset allocation benchmark tells us to do. So, we start with some cash and we decide what to invest from there based on long-term valuation-driven asset allocation attractiveness.

Grove: And Andrew, when people think of the term "risk" and when mum and dad investors out there think about the term risk, they often think, okay, I define it as not losing all my money. But you and your team, how do you define risk?

Lill: Well, I think we are quite unique as an investment company in defining risk very similarly to individuals, or mums and dads, because that's who we're actually investing on their behalf. So, if they don't want us to lose money then a big focus for us in risk is avoiding significant drawdown or avoiding permanent loss of capital for investing in expensive assets.

Grove: And Andrew, you mentioned you and your team approaching the end of your seven-year time horizon. Why are you excited about this?

Lill: Well, I'm excited primarily because I think we can go out to the market and say through a seven-year cycle that we have said is our time horizon for our flagship products, these are our results. Now, I'm not going to tell you right now whether those results are positive or negative because we still have seven months to go and it's still a long time. But the important thing is that effectively we have got a track record that investors can use to decide on whether they like this approach or prefer the traditional approach.

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