{"id":571,"date":"2016-05-29T15:43:36","date_gmt":"2016-05-29T15:43:36","guid":{"rendered":"https:\/\/ibsca.nl\/en\/?page_id=571"},"modified":"2024-10-23T12:57:14","modified_gmt":"2024-10-23T10:57:14","slug":"investmentpfilosophy","status":"publish","type":"page","link":"https:\/\/ibsca.nl\/en\/investmentpfilosophy\/","title":{"rendered":"Investment philosophy"},"content":{"rendered":"\t\t\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\n\t\t\n\t\t\n\t\n\t\n\t
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\n\t\t\t\t\tInvestment philosophy\n\t\t\t\t<\/h2>\n\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t<\/div>\n\n\n
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The IBS four<\/h2>\n\n\n\n

 <\/p>\n\n\n\n

Risk management<\/h4>\n\n\n\n

Investing involves taking risks. Investment risk needs to be balanced, however, with the risk that the client can bear financially and the risk that he can cope with mentally.<\/p>\n\n\n\n

We define risk as permanent impairment of capital. Eventually, this will result in the client not meeting his or her long-term investment objective.<\/p>\n\n\n\n

Gains and losses are asymmetrical. A gain of 56% in year one followed by a loss of 42% in year two, will result in a return of -10%. A gain of \u2018only\u2019 28% in year one followed by a loss of \u2018only\u2019 21% in year two, will result in a positive return of 1%.<\/p>\n\n\n\n

Our investment process is explicitly designed to avoid large losses. Large losses destroy the rate at which capital grows. This implies that a sound risk management process will contribute significantly more to meeting the long-term investment objectives than the constant search for the highest return.<\/p>\n\n\n\n

\u201cSuccessful investors look to control risk, first and foremost, with the understanding that the returns will come eventually.\u201d<\/em>
\u2013 Ben Carlson<\/p>\n\n\n\n

A sound risk management process needs to be implemented in the good years so that it has a maximum effect in the bad years. It\u2019s a \u2018hidden treasure\u2019.<\/p>\n\n\n\n

Models<\/h4>\n\n\n\n

Research has shown that simple decision models outperform expert forecasts. Experts have their decisions influenced too much by emotions and behavioral biases that distort the rational decision-making process.<\/p>\n\n\n\n

Successful investors, therefore, take probability-weighted investment decisions that are based on past observations. They do not believe that they are able to consistently predict the future correctly.<\/p>\n\n\n\n

“Those who have knowledge don’t predict. Those who predict don’t have knowledge.”<\/em>
\u2013 Lao Tsu<\/p>\n\n\n\n

A long-term investment strategy will be successful only when it is executed in a disciplined way.<\/p>\n\n\n\n

Sustainable<\/h4>\n\n\n\n

Studies have been unable to prove that sustainable investing results in underperforming a passive index.<\/p>\n\n\n\n

Sustainable investing should, therefore, appeal to investors who are attracted to financial returns as well as the source of these returns.<\/p>\n\n\n\n

Sustainable investing is, in our opinion, the preferred way to go forward due to its environmental, ethical and social benefits.<\/p>\n\n\n\n

\u201cHistory moves on, as it must.\u201d<\/em>
\u2013 Rockefeller Foundation<\/p>\n\n\n\n

Our exclusion criteria result in reduction of the investable universe by only 30%. However, this doesn\u2019t withhold us to diversify the portfolio adequately.<\/p>\n\n\n\n

Sustainable Investing protects an important group of our clients against reputational damage. It, also, help us in managing \u2018future financial risks\u2019 in the portfolios of all our clients. An example of the latter is the demise of the coal industry.<\/p>\n\n\n\n

Active<\/h4>\n\n\n\n

We are convinced that active investment management is superior to passive investment management.<\/p>\n\n\n\n

We aim to minimize the use of passive instruments. Passive instruments force the investor to \u2018mindlessly\u2019 invest in individual titles for the sole reason that they are part of an index.<\/p>\n\n\n\n

Investments in companies that are heavily overvalued and low-quality corporations are highly  correlated to low negative future returns. These are exactly the kind of  investments that we aim to avoid through active management. We also exclude companies that are involved in unsustainable business practices. The relationship with risk management is in both instances crystal clear.<\/p>\n\n\n\n

“As time goes on, I get more and more convinced that the right method of investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.”<\/em>
\u2013 John Maynard Keynes<\/p>\n\n\n\n

We, therefore, invest for our clients in a concentrated portfolio of high-quality and undervalued companies.<\/p>\n<\/div><\/div><\/div><\/div><\/div>","protected":false},"excerpt":{"rendered":"

Our investment philosophy is based on four principles: risk management, models, sustainability and active strategy.<\/p>\n

Our investment process is explicitly designed to avoid large losses. We rather base ourselves on models then on expert forecasts. We prefer a sustainable investment portfolio and make use of as little as possible of passive investment management strategies.<\/p>\n","protected":false},"author":4,"featured_media":0,"parent":0,"menu_order":3,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"editor_notices":[],"footnotes":""},"class_list":["post-571","page","type-page","status-publish","hentry"],"acf":[],"yoast_head":"\nInvestment philosophy - IBS Capital Allies | ENG<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ibsca.nl\/en\/investmentpfilosophy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Investment philosophy - IBS Capital Allies | ENG\" \/>\n<meta property=\"og:description\" content=\"Our investment philosophy is based on four principles: risk management, models, sustainability and active strategy. 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