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Modern Advisory
with Eternal Values

Investment Principles

At Evans & Partners we are committed to providing the best possible investment outcomes for clients. Every investor has a unique set of objectives that may encompass such factors as investment horizon, income and capital growth requirements, risk appetite, stage of life, estate planning and taxation. Our commitment to a personalised portfolio for each client ensures that we can tailor an investment solution appropriate to every client’s circumstances and objectives.

The core principles that guide our investment recommendations are:

  • The client comes first.  Your Evans & Partners advisor will work in partnership with you to deliver solutions that will help you to meet your investment objectives. They undertake regular reviews to ensure that your asset allocation strategy remains aligned with your changing circumstances.
  • Tailored solution for clients.  All clients are different and their investment objectives vary. We develop a tailored solution for every client recognising their particular circumstances. Tailored portfolios are particularly important to assist in maximising tax efficiency in Australia, given the capital gains tax and dividend franking framework.   

    A tailored portfolio also means that the risks associated with the highly concentrated nature of the Australian market, where bank securities dominate both equity and debt markets, can also be monitored. Individual investor beliefs on ethical investing can also be incorporated into portfolios.

  • Capital protection comes first.  Many investors think of risk narrowly as the variation in month-to-month returns.  However, we have a different approach that places a greater emphasis on capital protection during periods of market stress. We conduct extensive stress tests to build portfolios that can withstand stressed conditions without sacrificing too much return.
  • Diversification to reduce risk.  Some risk must be undertaken to achieve higher investment returns, however not all additional risk is rewarded. Diversified portfolios can typically achieve the same level of expected return with lower risk and can provide some protection from extreme events.  Portfolios should strike a balance between maximising returns, reducing short term return volatility and having some protection against episodes of market stress. We recommend portfolios that are diversified by geography and asset class to improve risk-adjusted returns. Diversified portfolios typically have similar expected returns in normal market conditions but are likely to be more resilient in times of market stress.
  • Asset allocation drives portfolio outcomes.  Asset allocation across asset classes is the most important decision for investors.  Academic studies have found that 90% of investment returns come from asset allocation. As a result, this is our primary focus when designing portfolios.

    Asset allocation should be focused on longer term factors such as valuations. However, portfolios also need to be dynamic in response to opportunities created by such factors as market over-reactions, economic developments, innovation, political events and regulatory changes. This is particularly important in the current climate where there is greater perceived instability in economics and politics.  

  • Risk has different dimensions.  Standard deviation is not a total measure of risk. Investors must also consider other risks such as liquidity. A high degree of liquidity is always preferred but there are some times when investors are rewarded for holding less liquid assets. 
  • Life cycle considerations.  An investor’s capacity to take on risk varies with age and stage of life. Investors who are in retirement and who have no other source of income have less capacity to take on risk. They have less capacity to deal with variations in income and return so should consider maintaining more conservative portfolios. Investors should also consider how much risk they are willing to tolerate; those investors that are not comfortable with daily or weekly volatility should also consider less risky portfolios. At Evans & Partners we seek to design portfolios that balance return objectives with your risk capacity and appetite.
  • Active management.  Market pricing is frequently not efficient because of behavioural biases and the short-term focus of investors. This suggests that managers with the right skills, resources and processes may be able to create excess returns with active strategies.  However, we will consider the use of passive investment through exchange-traded funds (ETFs) or index funds for some parts of the portfolio. For example, when the potential for positive returns to active management after fees is low or when a suitable active manager cannot be identified. ETFs are also useful for providing focused exposure to individual countries, sectors or macro themes.
  • Partner with the best managers.  We are able to choose managers that we expect can help achieve the best outcome for our clients after taxes and fees. We have the capability to develop our own solutions where there is no suitable investment vehicle available in the market, or we believe that we can achieve a better result than existing products after taxes and fees.