Investment Consulting

Long-term investment success means different things to different people. The best investment plan for you depends on your specific circumstances and objectives. That is why we began the investment planning process with a discussion during our Discovery Meeting of your values, goals, relationships, assets, advisors, preferred process and interests.

While everyone’s situation is unique, certain factors matter in creating any investment plan. These factors include the purpose of the investment, its size, sources and planned uses of the funds, and the amount of uncertainty you are comfortable having. By thinking clearly about your goals and circumstances, you build the foundation of an investment plan that best matches your needs and the realities of the financial markets.

These discussions help in determining the targets and objectives for the investment portfolio which in turn assists in determining a desired level of risk & asset allocation for the portfolio.

Investors know they should be long-term investors. This often gives rise to the question “How long is long term?” The answer for many investors is surprising—your long-term horizon should be as far into the future as possible. One of the many surprising facts about investing is that having a long horizon is a powerful advantage. You want your horizon to be as long as possible, because as an investor, time is your best friend.

For many investors, the most important long-term goal is to achieve financial freedom in order to be able to do what they want. But many investors also have intermediate-term goals—funding university educations for their children, buying holiday homes and funding charitable foundations are but three examples. Investors may also have goals that reach far into the future—for example, they may wish to leave legacies to their children, grandchildren and possibly even great-grandchildren.

Regardless of the time horizon of your goals, the simple fact remains that the more time you have, the more likely you are to succeed as an investor. Why? There are two reasons. The first is the miracle of compound growth. The second is the phenomenon of risk reduction over time.

If you have been careful in setting your long-term investment objectives, then you can be successful in planning your investments. Once we have worked with you to determine your time horizon and risk attitude and satisfied you with a feasible rate-of-return objective that will meet your needs, we can begin the task of building your investment portfolio. The first step in this process is asset allocation.

Asset allocation is the process of deciding how much of your portfolio to invest in each of the different investment types, or asset classes. Asset allocation should be your first investment decision because it is the most important.

Arrow Private Wealth takes a multi-asset, multi-manager approach across both growth & defensive assets. Arrow Private Wealth seeks to actively manage the allocation between asset classes to best optimize the risk/return outcome across the entire investment portfolio. Our process is primarily fundamental driven however we do leverage quantitative analysis to assist in our decision making process.

We implement diversification across asset classes. We define our investment universe into eight asset classes, Australian Shares, Global Shares, Property, Infrastructure, Private Equity, Alternatives, Fixed Interest & Cash. We have a firm belief that each asset class adds different risks and drivers of return to the portfolio which is important from a risk management perspective.

The next step is to select the investment approach and underlying principles. We must also consider any overlays for the portfolio that may be applied such as socially responsible investing.

Arrow Private Wealth’s investment approach leverages a collection of the best evidence from the academic disciplines of economics and finance. Investment experts usually summarise this evidence as a body of knowledge called Modern Portfolio Theory.

We also have a set of 5 underlying investment principles that guide our decision-making process. These are:

- Learn from the past but focus on the future.
- Diversification is the key.
- Buy a quality asset when the price is right.
- Secular trends focus, not cyclical.
- Exploit relative valuations and be nimble.

The final step in the process is constructing the portfolio. This involves Arrow’s internal investment team selecting the investment products that will provide the desired asset allocation exposure and risk/return dynamics. This will be returned to you as an investment proposal where the recommendation is clearly presented.

The investment universe of available products is determined by the Arrow Approved Product list which is reviewed on an ongoing basis by our internal investment committee. Unlike many other investment firms we don’t look to approve every investment product, instead we seek to deliver best in class manager solutions for our clients.

For a product to be added to our approved product list we focus on qualitative and quantitative research. Quantitative systems are leveraged internally which includes a review of a managers qualities including downside protection, volatility, drawdown analysis, sharpe ratio, returns, etc. We then consider qualitative factors obtained from leading external research houses supplemented by a meeting with the product managers themselves. The investment committee must then determine if the product is better than an existing solution or differentiated exposure with a unanimous decision.

The financial goals and values you shared with us at our Discovery Meeting have become the basis for your investment plan, as well as our Strategic Portfolio Management Process. This is not a one-time event, however. The Strategic Portfolio Management Process that we use is constantly ongoing to ensure that we are on track to achieve those goals and values.