Chetwood Investment Management do not have traditional views on portfolio diversification.  Investment markets have changed since the great financial crisis and we have changed with them.  The value and benefits of diversification are long-held investing principles. The entire concept is based on the idea that stock and bond prices generally move in opposite directions. When one is rising, the other is falling. This strategy was at the heart of portfolio construction for generations … until central bank Quantitative Easing policies led to this standard portfolio construction method starting to fail when you need it the most.

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We actively manage our portfolios on a tactical basis to try to take advantage of market movements. Whilst the bulk of our portfolios are invested in long term strategies, where we sit and hold our favoured sectors, the markets continue to give us opportunities to trade tactically with the balance. This way we hope to successfully navigate the months and years ahead, securing both strong long term growth, but also managing the downside risks when markets turn against us.

We are experiencing a period post the global Credit Crisis where the rule book is being re-written, yet people of influence are finding it difficult to come to terms with the fact that what they had learned to be fact is no longer the case. By their very nature, most politicians, bankers, economists and fund managers exist within a framework, and their framework is being torn down and replaced. Many “star” fund managers have seen their star wane, sometimes terminally, and mostly those who invest on a “value” basis have struggled to succeed in a decade where the environment has only fleetingly matched their strategic outlook, as discussed earlier in this note.

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Our investment process is constantly looking for new ways to navigate the ever-noisier world of economic forecasting and analysis. Most people accept that the value of their investments will fall from time to time. With today’s short-termism dominating the previous long term investment strategies, it is increasingly important to try to assess whether these short term losses are simply “corrections” (in which case it will tend to reward us to remain calmer and not make many major changes to the investment strategy) or if they are likely to morph into an entirely more damaging longer-term bear market. With the higher level of volatility caused by algorithmic trading processes and wayward tweets, this can be a very difficult assessment to make and all the more reason to take professional investment advice.

As an independent investment manager, we have no affiliation to any providers, so we can confidently say we always put clients’ interests first and maintain complete objectivity.