Investment Principles

Our investment policy:

  • is free in the weighting of countries, industries and currencies as far as the principle of a broad risk diversification is not violated,
  • reduces investment risks exclusively through diversification, a prudent security selection and their flexible weighting,
  • does not replicate indices and does not compare itself with a benchmark,
  • is supported by in-house research,
  • makes investment decisions after thorough analyses and discussions through majority decisions within a team and never alone on basis of rules-based or quantitative models.

The primary objective of our investment policy is the long-term preservation and growth of purchasing power of the wealth clients have entrusted us with. Following principles serve this purpose:

  1. The high share of equities in the investment structure
    Economic history shows that especially income-generating real assets are able to compensate for the ongoing inflation of money in the long-term. Should the requirement to be able to sell small or large amounts of an investment at any time be given, then the sustainability of an investment can only reach through an emphasis on tradable equities.
    As real assets, equities offer the best long-term safety from inflationary developments. A prudently selected, internationally diversified investment in equities has in the past despite sever volatility overcome wars, dictatorships, inflation and currency reforms and has been able to preserve and even grow capital in the long-term.
  2. Preference of stock corporations which use natural and human resources frugally and responsibly and focus on research and development to develop more sustainable production methods and environmental-friendlier products.
  3. Restraint in allocations towards bonds in case of low ratings low real returns.
  4. Avoidance of:
    • investments that are not traded or only traded in illiquid markets,
    • risky investments, such as swaps, hedge funds or derivatives,
    • investments located in dictatorships or countries in chaotic states.
  5. The relatively low costs of our investment funds.

That our securities selection process within fund management applies sustainability criteria to an appropriate extent is shown by the rating agency Morningstar.

We are sceptical about other principles regaring sustainability which particularly affect compliance to supposedly good ecological, ethical and social principles at the securities selection process.
We deem the steady increase in propagating such a securities selection process as a marketing instrument which makes the human need for an ideal world a foundation for a successful fund distribution. Apart from the fact that investment fund managers are not able to review international and specialized production processes, the following examples show that taking these contradicting principles into account in the securities selection process is very problematic.

  • Corporations which produce a lot of CO2 should be avoided. However, for many essential products which emit a lot of CO2 in their production, e.g. cement or steel, no other production methods exist.
    In the space of power generation the alternative energies next to burning fossil fuels such as coal, gas or oil with the exception of hydropower, solar power on rooftops and offshore wind power are expensive, unreliable and harmful to the environmental:
    Nuclear energy is no option due to the unresolved issue of waste disposal.
    Onshore wind-“parcs”, solar pannel fields and plantation of biomass on large pesticide treated monocultures of rape and corn disfigure the landscape, destroy forests, meadows, habitats and biodiversity, contaminate ground water and damage fertile soil through overexploitation and erosion.
    The disadvantages of these alternatives are more grave than those from the CO2, especially as its responsibility in global warming is questionable when looking at the geological history of ice ages and warming periods.
  • Genetic engineering in crop cultivation is suspected of harming humans and nature. However, the cultivation of fertile, drought tolerant and pest tolerant crops is indispensible in fighting hunger in many parts of the world.
  • Child labour is a sign of major misery which requires every family member to fight for survival of the family. How can one think that this misery is reduced if products from this child labour are shunned and other products, which can be produced almost as cheap in industrial countries mechanically, are bought?
  • Furniture and windows made from tropical timber with eco-label might be comforting, but the paper of these certifications is forbearing.
  • Manufacturing of arms supports wars, misery and displacement. But who issues arms orders, buys arms, uses them and finances all this through issuance of “gilt-edged” bonds?

Whoever wants to improve the world through a securities selection process loses credibility. To achieve this purpose exertion of individual influence on politics and public opinion or at least a corresponding consumer and voting behaviour is needed. Only in this way one can work towards the improvement of political and social conditions.

  1. Considered asset classes
    In general we will invest in the asset classes equities and bonds. The following investments are excluded:

    • Investments in derivatives, certificates and shares of hedge funds, as they are deemed intransparent, expensive and speculative.
    • Gold and other physical precious metals, as they do not produce current income, have relatively high storage costs, derive their worth from pure speculation and the ownership of gold can be prohibited by the government when its utility would be highest.
  2. Value of investments
    Investments are only made, if the current market price is reasonable compared to the quality of a company and its future prospects.
  3. Market liquidity and availability of information
    We do not invest in non-listed companies and proceed very carefully with investments in companies displaying limited liquidity. We only buy stocks and bonds from companies that regularly publish a sufficient amount of information.
  1. Analysis
    The foundation for every investment decision is a thorough analysis which accounts for economic, industry and company specific factors qualitatively and quantitatively and factors in market sentiment and political trends.
  2. Diversification
    With a broad geographical and industrywide diversification we avoid bulk risks in our portfolios. Internal guidelines confine the maximal loss of individual securities compared to the entire portfolio which e.g. could stem from misjudgments, and prevents behavioural distortions, as e.g. an emotional attachment to large individual positions.
  3. Controlling
    For all investment decisions, the impact on the current portfolios is analyzed. All portfolios are monitored and are subject to risk controlling.