Research

Going above and beyond: stronger investment theory and practice

October 8, 2015
There are significant limits to mainstream investment theory and how it is used in practice. This paper presents a stronger investment model that acknowledges and begins to address the complexity innate to the investment industry. As a result, we argue that investment practice should adopt a few organising principles: - Harness the power in values and beliefs processes to create the foundations to portfolios - Adopt realism with respect to comparative advantage in in-house/out-house skill - View risk in multiple ways particularly in mission impairment - Recognise risk is both an across-portfolio and across-time challenge - Recognise 'mind-set' as the biggest hindrance to, and opportunity for, long horizon investing - Integrate ESG/extra-financial factors for sustainability and responsibility - Enhance portfolio construction by reference to portfolio quality and risk management plan.