Moneyworks NZ Limited Investment Philosophy

Investment Objectives and Risk Management

Investment Cash Flow Objectives

At Moneyworks, we aim to build portfolios that will maximise the chance that clients will meet their long term cash flow objectives. In other words, we aim to minimise the risks that our clients need to take.

Investment Capital Preservation          

In terms of risk management, the key aspect is to ensure capital is preserved in the medium term.

Investment Risk Management

Investment Risk Profiling:          The first step to risk management is to determine the level of risk that is appropriate for any particular investor. We do this by using risk profiling tools and having a discussion with each investor about those results.

Investment Diversification:        After that level of risk is adopted, it is important to make sure that the portfolio is appropriately diversified at all time.

Investment Monitoring:              By monitoring market valuations, we expect to be able to avoid some, but not all major market downturns by reducing portfolio exposure to risk assets when they appear overpriced.

Investment Asset Allocation

At Moneyworks we believe that broad swings in markets can be anticipated and use Dynamic Asset Allocation to add value and reduce the risk of portfolios. In order to successfully implement active asset allocation, we access a range of information including research such as Farrellys, Morningstar and Lonsec, in addition to our experience.

Investment Asset Classes and Currency Management

Investment Active Investment Management

At Moneyworks we believe that markets are not efficient and it is possible to beat index returns after fees. We believe that superior active managers that will beat the index can be identified. This is as a result of the strategy, conviction, active management, skills of individuals and philosophy of the investment manager.

Currency Management

At Moneyworks we believe that currency on individual portfolios should be fully unhedged, as it is difficult if not impossible to predict currency movements and because being unhedged provides the optimal level of diversification. However, individual fund managers may elect to add hedging of currency to their investment strategy within their fund.

Investment Liquidity

A small exposure to relatively illiquid assets is fine if the investment opportunity is attractive enough. In a long term portfolio it is unnecessary for all assets to be liquid at all times.

Alternative Investments

Advisers at Moneyworks will only recommend investment in alternative investments if we really understand the opportunity including the risks, what is likely to drive sustainable returns, the fees, and potential for illiquidity. Few investment offerings pass these tests.

First and Second Tier Debt Issues

A core belief of advisers at Moneyworks is that having secure debt (first tier debt) in a portfolio is necessary to provide stability in a downturn and a guaranteed source of income. We do not take risks with this part of the portfolio.

At Moneyworks we do recommend securities with credit risk (second tier debt) in portfolios to take advantages of the high premiums over and above the secure debt (first tier debt) from time to time. When the premiums are insufficient, we will ignore this asset class.

Taxes and fees

At Moneyworks we believe that no investment should be made for tax optimisation reasons only. But, if all else is equal and we are comparing two options where one has a preferable tax environment, we will most likely choose the option with the best tax situation for the investor.

Advisers at Moneyworks consider after fee outcomes. Fees should not drive decisions as long as they are more than offset by the value created by active management.