PHILOSOPHY AND STRATEGY

PROVIDENCE INVESTMENT PARTNERS

PHILOSOPHY

Providence means ‘timely preparation for eventualities’ and sits true with our core beliefs, guiding us in all decision making. In order to prepare for eventualities, one has to invest for the long-term. We believe that trying to time the market is futile. By remaining invested, we are able to capture the equity risk premium and generate higher returns. We follow a simple approach and consistently apply it through different market cycles. We pay particular attention to costs and therefore reduce it by making use of exchange-traded funds (ETF’s) and keeping turnover low in the portfolio.

The success of our business is premised on integrity, trust and long-term relationships with all stakeholders. We are a client-focused business and understand that putting our client’s interest first is critical.

STRATEGY

Core (60-80% allocation in the portfolio):

The Core is made up of low cost, diversified ETF’s that are predominantly invested in developed global markets. It is very difficult for active fund managers to outperform developed markets due to its information efficiency. We therefore prefer making use of ETF’s. The exposure to developed markets brings stability to the overall portfolio.

Satellite (20-40% allocation in the portfolio):

The Satellite’s objective is to outperform the market. The average active fund manager underperforms against the market (net of fees), but we believe we can identify those with the potential to outperform by allocating to active fund managers whom have the following attributes:

 

Highly skilled

Long-term focus

Benchmark agnostic

Operates in inefficient markets

Eliminates corporate governance issues

Do not over diversify

Have the appropriate style

Have fair fees

Have similar values