Investment Procedures

Wynsam Wealth Investment Philosophy

Wynsam Wealth believes in the saying: “time in the market, not timing the market”.
Evidence has convinced us that an investment portfolio should be designed to fit the needs, goals and profile of the investor and then left for the intended term of investment, only to be rebalanced when necessary. We do not believe that it is right to try and change investment portfolios as and when the market ebbs and flows.

Wynsam Wealth looks to create portfolios that are balanced to meet the risk profile and goals of the investor. We believe that diversity is the key tool in managing risk in the market. Diversity should be achieved across assets, sectors and individual asset managers.

Having said this, we also acknowledge that the investment universe within South Africa is very small in comparison to global markets. Thus, for this reason as well as long term cost, we favour using passive strategies as a core underlier of an investment portfolio. Passive strategies can then be complemented by asset managers that introduce diversity in terms of style and stock picks.

While we follow our investment philosophy the foundation of every investment portfolio must be the client. Each client has their own unique set of needs, circumstances, goals and risk profile. Thus each client must have a unique investment portfolio tailored to meet their needs. Wynsam Wealth does not apply a one-size-fits-all approach.

How we implement our philosophy:

  1. We establish the clients profile taking into account the following:
  • Assets
  • Investment term
  • Health
  • Liabilities
  • Goals
  • Risk attitude – using the Finametrica questionnaire
  1. We then establish the clients profile for each goal they want to achieve. We feel that there can be different profiles created for different goals. An investment portfolio must be set up, which helps clients clearly differentiate between which investment is aiming at which goal. For example, the clients goal of saving for a car will require a very different investment approach to their goal of saving for retirement. Where the client may approach their shorter term, more immediate goal conservatively, this does not make them a conservative investor when it comes to retirement.
  2. Create investment ‘pockets’ per goal. This we do to the extent possible. If an investor only has R500 a month to invest, it is pointless trying to divide R500 between 3 different goals. In this case we would take a more generic approach.
  3. Create the core for each pocket using a passive unit trust fund. We favour unit trusts over ETFs as they have less participants and thus are generally cheaper.
  4. Add actively managed funds to the core which assist in reaching the goal via diversity.

Using industry accepted terms we can class investor profiles loosely as follows:

Aggressive

Longer term investment goals (10 years or more). Clients who can handle loss from an emotional point of view and fully comprehend the nature of investment markets (as determined by the Finametrica risk questionnaire). Clients who can afford to lose capital in the short term.

  • Asset Spread Guideline
  • Total Equity from 75% to 100%
  • Property from 0% to 25%
  • Foreign Equity from 15% to 30%
  • Other assets to make up the balance
Moderate

Medium term investment goals (5 – 10 years). Clients who have a tolerance for short term loss but are not drawn to taking risk in return for reward. These clients understand the nature of the market but may not be able to deal with capital loss from an emotional point of view (as determined by the Finametrica risk questionnaire). Clients who in the short term can afford to lose capital but would prefer not to lose capital on a rolling 12 month basis.

  • Asset Spread Guideline
  • Total Equity from 50% - 75%
  • Property from 0% to 25%
  • Foreign Equity from 0% to 25%
  • Other assets to make up the balance
Conservative

Short term investment goals (1 – 5 years). Clients who have little tolerance for loss in terms of the value of their assets compared to liabilities. These clients have no appetite for risk and are averse to short term capital loss (as determined by the Finametrica risk questionnaire). These clients may or may not understand the markets; either way they want no loss of capital over a 12 month rolling basis.

  • Asset Spread Guideline
  • Total Equity no more than 40%
  • Property from 0% to 15%
  • Foreign Equity from 0% to 15%
  • Other assets to make up the balance