What are our investment beliefs?

Why do we have investment beliefs?

Our beliefs have several concrete benefits.

Research suggests that financial institutions that have a set of investment beliefs can generate more sustainable long-term performance than those without them¹.

Dr Sarah Ruggins, Head of Multi Asset Research at St. James’s Place notes: “Since we began using these beliefs, the rate of our decision-making has increased, as has the quality and efficacy of those decisions .”

There are several reasons why beliefs can help financial institutions and wealth managers perform better. One reason is they help create alignment and consistency: you can think of our investment beliefs as our ‘North Star’ which provide a single point everyone in the Investment Committee can look to when making decisions on your behalf.

Importantly, the beliefs also help to eliminate the potential for behavioural bias or groupthink to distort the decision-making process.

Beliefs also help bring a sense of clarity and discipline to our decision-making process. The investing world can be extremely fast moving and complex. Having a set of beliefs against which any potential idea or option can be held against will help us make the right decisions at the right time.

Finally, investment beliefs provide transparency. These beliefs will be at the heart of any decision made by our Investment Committee . We want them to be widely known to help explain the thought process behind the evolution of our funds and portfolios.

In the name of this transparency, over the next few months, we will be going through each of our seven investment beliefs. We’ll be explaining what they mean, the rationale behind them, and how they can be seen across the evolution of our investment offering.

Investment belief #1: ‘Achieving the right outcomes for our clients is the starting point for everything we do’

The first investment belief formalises what is at the heart of our Investment Committee: achieving the right outcomes for our clients. We take our responsibilities very seriously and understand how important it is for you to achieve your goals and objectives.

Different people will have different requirements, and by focusing on the whole outcome of their journey, this belief takes a broad approach. So, this might include wanting to invest responsibly, requiring income for an unknown period of time during retirement, wanting to leave something behind for a loved one, just wanting capital to grow, and so on.

By placing outcomes at the core of our investment beliefs, it means decision-making is seen through the lens of ‘is this aligned to achieving the best possible outcomes?’

According to Tom Beal, St. James’s Place’s Chief Investment Officer, “We are acutely aware that the outcome a client receives isn’t just about the investment decision. It’s a combination of what the client goals are, the advice they receive, and the decisions they make in conjunction with their partner on that investment journey.”

One scenario where this belief has had a concrete impact on the decision-making process was with the launch of our InRetirement funds.

Upon retirement, investment needs can change. While retirees will want to use their money to support a good lifestyle, they need to ensure their money doesn’t run out. And this is before you get to questions around typical risks like inflation, market volatility and so on.

As Beal says: “It very much took us down a different path by starting with ‘what does the client need’, rather than ‘what is the opportunity set out there today’.

The InRetirement funds were designed with these types of questions in mind. For example, as these funds are aimed at retirees who will want regular income, they have been designed to ensure sufficient liquidity, and therefore easier, regular access.

This is just once example and putting good client outcomes at the heart of everything we do.

In the next investment beliefs article we will look at how asset allocation is key to driving investment returns.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

¹ Gordon Clark and Roger Urwin, Best-Practice Investment Management: Lessons for Asset Owners from the Oxford-Watson Wyatt Project on Governance, 2008