Ethos Financial Advisers Investment Philosophy
The underlying investment philosophy of Ethos Financial Advisers is the protection of your capital and the long term accumulation of wealth through a diversified but focused investment strategy.
You will no doubt have heard the mantra that if you lose money in the short term you should not worry and that in the long term it will all be fine. Ethos Financial Advisers believes this is simplistic and only partly correct. The key way to build wealth is to compound your investment growth through reinvestment of the capital and income return on your investments. There is little point in achieving a positive return of 20% in one year and in the next a negative return of 20%. The following example illustrates the point further.
| Funds At Start | Year One | Year Two | Year Three | Year Four |
| Stategy A | 20% | -20% | 10% | 14% |
| $100 | $120 | $96 | $105 | $119 |
| Strategy B | 11% | 0% | 7% | 9% |
| $100 | $111 | $111 | $118 | $129 |
Even though in three of the four years you were invested a higher return was achieved under Strategy A. The significant loss of capital in year two reduced the ability of the fund to generate additional return.
There may be periods when your investments with Ethos Financial Advisers underperform the market as a whole. However this will most likely happen when markets are performing well, for example when the market returns 28% your investments may return 24%. However when investment markets decline your investments will likely outperform the market preserving your capital and giving you the ability to further compound your investments.
How is this achieved?
Ethos Financial Advisers adopts a diversified focused investment strategy.
We recognise diversification is an important tool in planning an investment strategy, however too much diversification means that you will always achieve a return around the benchmark or the index. In other words you will be paying a fee to achieve a return without any value added.
Ethos Financial Advisers seeks to add value through diversification across asset sectors (eg; Australian shares, International shares etc;) however within those investment sectors the investments will be focused. We will invest in fund managers that have a targeted investment approach and do not hold so many investments that they are unable to add value to the portfolio. We also invest with managers that aim to have consistent returns over a period of time and have a history of market out performance over the long term.