At Stewart Group Asset Management (SGAM), our investment approach is built on a solid, straightforward, and meticulous investment philosophy. This investment philosophy and approach is delivered by SGAM to investors in the ACI Funds (‘Scheme’) through the role that SGAM play as investment manager of the Scheme.
We adhere to the widely-recognized Modern Portfolio Theory, which is grounded in these core principles:
Market efficiency and rationality of investors.
A strong relationship between risk and return.
The essential nature of diversification.
The critical role of portfolio structure in determining performance.
When applied, this means…
We practice smart diversification and avoid market timing.
You never know which market segments will outperform from year to year. By holding a globally diversified portfolio, investors are well positioned to capture returns wherever they occur.
We consider the drivers of returns.
Academic research, including the Fama-French Model (described below), has identified equity and fixed income factors which point to differences in expected returns. Investors can pursue higher expected returns by structuring their portfolio around these factors.
We know markets have rewarded discipline.
Historically, the equity and bond markets have provided growth of wealth that has more than offset inflation. Evidence proves investors are able to ride out short-term volatility and periodic underperformance, and investors would be rewarded for those losses in the long term. This means, historically, it has paid to stay in your seat through market fluctuations.
ACI Funds does not offer financial advice. Please seek a trusted financial advisor if you would like assistance in determining which fund is right for you.
The Fama-French Model (FFM) is a statistical model for calculating likely returns on a given portfolio, developed initially by Nobel laureates Eugene Fama and his colleague Kenneth French in the 1990s and updated in 2014.
It aims to describe the excess return of stocks portfolio by five factors, some of which are used to guide our asset allocation decisions:
The rationale being that the validity of each of these factors is backed by empirical data. Historic returns data shows companies that are small-cap, have high book-to-market value and high profitability tend to outperform the overall market.
This model has proved highly reliable over time. It expands on the Capital Asset Pricing Model (CAPM) by looking beyond risk. Adding these other factors creates a better tool for evaluating performance – giving the ability to explain over 90% of return in a diversified portfolio.
This can therefore be utilised to target drivers of high expected return during portfolio construction and asset allocation.
The ACI Funds options have been created with consideration to the FFM.
We believe sustainability-focused investors can pursue a sound investment experience that reflects their sustainability values.
Through our relationship with Dimensional Fund Advisors, we are able to leverage their patented investment methodology to not only start with a robust investment framework, but also incorporate sustainability considerations for the majority of the underlying investments.
In alignment with ACI Funds and Stewart Group Asset Management’s own philosophy, Dimensional starts with a broadly diversified, research-guided approach, which aims to minimise unnecessary turnover and trading costs while emphasising securities with higher expected returns (as indicated by research). With this systematic investment approach as a base, Dimensional then builds diversified, cost-effective sustainability strategies to pursue higher returns while applying certain environmental criteria.
Start building your investment portfolio today without the need for an enormous investment!
We invite you to learn more about ACI Funds and its open-access approach to investing. Your financial future is now firmly in your hands.
The investment manager of ACI Funds is Stewart Group Asset Management (SGAM) and the issuer is FundRock NZ Limited.
The Product Disclosure Statement is available at www.acifunds.co.nz
