Each Clearwater portfolio is run by an investment committee. Governed by a strict policy framework, the investment committee meets every quarter, when each member’s view of the economy, portfolio asset allocation and underlying holdings is carefully considered.
On top of this, the CEO meets fortnightly with portfolio managers and committee members are always welcome to attend. During periods of high market stress or volatility – such as the initial impact of COVID-19 - we will always have additional meetings to effectively manage risk.
This rigorous approach is designed to drive our decision making, and it ensures we can:
Maintain a disciplined approach when it comes to decision making
Minimise, and ideally remove emotion, from decision making
Develop consistency in decision making
Retain a focus on our objectives for each portfolio and avoid being distracted by events and circumstances that we can’t control
THE IMPORTANCE OF A STRATEGIC ASSET ALLOCATION
When we set up a portfolio, we always start with what is known as a strategic asset allocation (SAA). A good asset allocation matches your level of risk with your investments and should provide a sound base to achieve your financial goals. Nevertheless, if our SAA doesn’t fit your needs perfectly, then a partial allocation to one of our portfolios may be more appropriate.
After we have mapped out a broad asset allocation across each particular fund, we allocate the percentage of growth assets versus defensive assets. Growth assets are higher risk but give a higher return, while defensive assets are usually more stable and provide income rather than capital growth.
Finally, we work through the allocation for each individual asset class, detailing the amount of Australian and international shares. Once this process is complete, we diversify the assets even further. This includes allocating sectors within each class - such as large and small companies, emerging markets, property, infrastructure, bonds, cash and other opportunities. This ensures the portfolio holds a good mix of investments.
Each day, the CEO receives a report with all the holdings, cash position and transactions in progress. This report is used to monitor positioning and activity so that action can be taken immediately if needed.
The investment committee’s main role is to keep a close eye on the fund and to make sound financial decisions that will grow your investment. We always operate in line with the policy, and our main focus is on achieving our stated targets.
Clearwater Portfolio Management
