Asset Management Philosophy

Developing Investment Strategies and reviewing them with clients, whether they are charities, private clients or trustees / deputies and then managing those assets on a proactive basis is where OCM Wealth Management really has in the last decade added value and is the basis against which our reputation has been forged. At outset, we agree the “outcome” a client is trying to achieve and then we work with that outcome in mind in being proactive in relation to the asset strategy and asset allocation at all times, in line with the client's attitude to investment risk and reward.

With hindsight, this has worked very well as it has meant that a client has moved from one asset to another and taken risk off the table when markets have become more volatile and then taken risk again from a high base line when risk subsides, remembering that risk is subjective and is different for us all. On that basis, we do not believe in a long hold strategy, we believe in the level of risk being appropriate to client's objectives as regards to the outcome they want and the outcome they have achieved to date and setting the two off against each other.

As a firm, we do not believe in using one investment strategy because they are all of benefit in different economic conditions. On that basis, we will use Active and Passive investment theories as well as focusing on Alpha and Beta when appropriate and adopt the use of ETF strategies when we feel market volatility has subsided, or we want to access traditionally illiquid assets. The overriding theory though, is to create an efficient portfolio (optimal diversification to give highest return, with least risk) but to not carry this out blindly following assets that the Investment Committee feel will damage the performance of the portfolio, or put the objective at risk.

This means that we can be flexible and move strategy to try and achieve the highest potential return, with the least amount of risk. This does not mean we are psychic or guaranteeing positive returns, it just means we are aggressive in relation to the Asset Allocation Strategy of our portfolios, as this is where we believe the added value lies in relation to managing a client’s portfolio.

We do this in three ways:-

A Robust Strategic Asset Allocation.
Sensible Tactical Asset Allocation.
Use of Market Leading Assets

The portfolio is made up of all asset classes with the core portfolios being diversified by the Investment Committee, using profiling and asset management techniques to define a portfolio that is likely to satisfy the long term return expectations of an investor.

To do this, we look at the objective of each of the portfolios and the equity / non equity split that each one has, as defined by the Investment Committee at a macro level and then use assets from the following pool to invest into to create a non equity / equity split:-

Cash
Gilts, UK and Global

Absolute Return Funds
Corporate Bonds
Strategic Corporate Bonds
High Yield Bonds
Property
Cautious / Balanced & Active Managed
Global Growth
Global Emerging Markets / BRIC Economies
Asia & Far East
UK, US and EU Direct Equity

We then add a tactical element to the Asset Allocation Strategy by looking at short term trends and economic data, to take advantage of any near term market conditions. We assess the asset position, therefore, on a short term and long term basis, to tactically try and avoid assets that look to be detrimental to the short term performance, with a focus on trying to prevent short term losses due to economically toxic assets.

The core portfolio asset allocation is reviewed annually by the Investment Committee to ensure it is still valid. The positioning of the tactical overlay is reviewed quarterly, but is subject to continual review to account for rapidly changing market conditions.

The final step is to use market leading assets to gain exposure to the sector and these are reviewed again every quarter, to ensure the fund we are using is market leading. If a fund starts to underperform, then unless there is a genuine reason, we will remove it from the portfolio and ensure at your next rebalance review the fund is altered to reflect the change.

This is where we feel “our independence makes us dependable” in that we work for you and are constantly reviewing everything to ensure your strategy and asset allocation is using market leading funds. If you are not an Independent Firm, this cannot be done.

It is also important to remember that the investment objective of all of our funds is to not try and outperform the global indices when markets are rising, it is to try and achieve a balanced return in all market conditions. What this means in reality is that we are trying through Asset Allocation Strategies, to provide a return which will be less volatile than the indices.

Therefore, you would expect the losses to be lower than the indices in falling markets and conversely, for the gains to be lower when indices are rapidly expanding