Depending on a client’s risk tolerance, objectives, and time frames, we structure our client’s portfolios with a differing allocation to growth assets (e.g., shares) and defensive assets (e.g., fixed interest).
To implement this strategy, we will typically use a mix of low-cost managed funds to provide broad diversification across various asset classes. We may also use direct securities that are efficient and based on a client’s preferences.
We employ several filters before selecting investments, including funds that have low fees, provide tax efficiency and are non-speculative.
We adhere to an asset-class investment philosophy.
An asset class strategy aims to deliver returns from each asset class with minimal costs. It ensures investors are appropriately rewarded for their investment risks if executed correctly. The benefits of this approach are that it can lead to reduced portfolio volatility and risk, low fees, and the prospect of higher returns.
Find out more information on our Investment Philosophy page.
Fixed interest returns are determined principally by:
- Term to maturity
- Credit quality – this reflects the financial strength of the organisation or institution that has issued the fixed-interest investment
- Higher returns are generally associated with longer maturity and lower credit quality.
Cambridge Partners’ fixed interest strategy is designed to:
- Reduce overall portfolio volatility, and
- Enhance certainty of income
To help minimise risk, we diversify within the fixed interest strategy between different types of securities. It is prudent to have a portion of the portfolio held in offshore fixed interest, principally due to the relative size and lack of liquidity of the New Zealand debt market. When investing in offshore fixed interest, we only use fully hedged funds to the New Zealand Dollar to avoid unnecessary exchange rate risk.
Please note that Cambridge Partners does not engage in tactical asset allocation (sometimes termed “market timing”). We employ a buy-and-hold approach, and where individual securities (investments) are chosen, Cambridge Partners will select them to track the overall return of the asset class from which they are chosen. We do not necessarily expect to achieve better returns than those provided by the New Zealand debt (fixed interest) market as a whole.
We are mindful of keeping the “tax drag” on investments to a minimum and structure investment strategies to reduce tax liabilities where possible. We will typically use different fund structures for other asset classes to minimise tax, such as Portfolio Investment Entity (PIE) for NZ fixed interest and NZ equities, to cap the tax on interest and dividends at 28%.
As part of our reporting package, we provide comprehensive tax reporting. This consolidated reporting helps to simplify tax return preparation and reduce the cost of administering clients’ financial affairs.
Yes. We offer a range of model portfolios focused on delivering the best risk-adjusted financial return, plus model portfolios that also consider Environmental, Social and Governance (ESG) issues.
Cambridge Partners will monitor your investments on an ongoing basis and provide you with comprehensive quarterly reporting. The reporting will include the net returns after tax and fees. We will also offer regular economic updates to keep you informed on investment markets, including information on benchmark returns. In addition, Cambridge Partners will meet with you at least annually to review your situation and progress towards your specific goals & objectives.
Cambridge Partners access wholesale share broking rates for direct equity and fixed-interest purchases to ensure the best pricing.
Cambridge Partners also negotiates preferred rates with fund managers (where possible) based on volume. This is made possible because we manage more than a billion dollars of assets on behalf of our clients on a fee-only basis.
We utilise a third-party investment custodial system for holding your investments. Any payments you wish to invest will be paid directly to the investment custodian (not to Cambridge Partners), and withdrawals can only be made to the bank account nominated by you.
The custodian also sends a transaction summary directly to you on a 6-monthly basis. This summary itemises all portfolio transactions and is sent in addition to the quarterly reports you receive from Cambridge Partners.
You can access your investment portfolio information online at any time.
Yes. All our client service agreements are in writing. These agreements specify the custodian’s and Cambridge Partners’ obligations and responsibilities to our clients.
We prepare an Investment Policy Statement and/or Financial Plan tailored to each client’s requirements, specifying how their investments will be managed and our responsibilities.
Cambridge Partners charges clients a fee based on the value of the Funds under Management. This fee reduces on a sliding scale for more extensive portfolios, and your Adviser will detail the fees specific to your circumstances as part of the initial discussion. Our fees are tax-deductible and will be deducted from your portfolio.
Cambridge Partners employs low-cost, low-turnover institutional funds, most of which are unavailable to retail investors. The weighted average fund manager fees for the total portfolio will likely be less than 0.37% gross per annum.
Investment custodian fees typically start at 0.18% p.a. and reduce on a sliding scale for larger portfolios. These fees are also tax deductible.
The fund manager fees are deducted at the fund manager level and reported quarterly to us. Cambridge Partners monitors the total actual delivery cost carefully – as this ensures an enhanced net return for our clients – and all fees will be detailed by your adviser before proceeding.
Many fixed-interest providers and fund managers pay commissions to advisers upon placement of the investment and on an ongoing basis. Additionally, sharebrokers pay commissions to advisers when shares or fixed-interest investments are purchased via them.
As we are an independent advisory firm, we rebate all commissions, manager fee rebates and any other financial inducements back to you at all times. This ensures a transparent process; you will know exactly what fees are being charged and can rest assured that every recommendation we make is based on what is best for you.
No. Performance-based management fees reward the investment manager rather than the client. Furthermore, they detract from the net performance of the client over the longer term. We choose investment managers that do not charge performance-based fees.
For more information on our fees, please get in touch with us.