Investment Philosophy

Independent, conflict-free investment strategy development:

We believe that the most sophisticated and successful investors make a clear distinction between investment strategy development and asset management. Investment strategy development entails asset allocation and selection of asset managers across all asset classes. Asset management involves security or specific investment position selection and is generally highly specialized around a sector within a specific asset class. The investment world has evolved into a complex array of asset classes where specialization is critical for the asset manager to excel. We believe strongly that an independent investment advisory team, as distinct from asset managers, should determine asset allocation and recommend the best asset managers in a given asset class for any given portfolio. It is highly unlikely that any one asset manager will be best of breed across numerous asset classes. This fact dictates our belief that any given investment portfolio should have its strategy (asset allocation and asset manager selection) determined by an independent internal or external investment advisory team with no incentive to appoint itself as asset manager in any one area. We believe that any institution which purports to provide both roles is conflicted. Partners Capital plays the role of an independent external adviser with no asset management roles and therefore is free from conflicts in allocating assets and selecting asset managers.

Multi-asset class diversification:

The equity market is one of the most competitive, volatile and high risk asset classes in the investment world. The competitiveness of the equity market makes it very difficult for even the most talented equity managers to beat the market from one year to the next. We aim to be more concentrated in the less competitive or inefficient sectors of the investment world, where talented asset managers can and do generate exceptional risk-adjusted returns for their investors. The result is a robust portfolio not overly exposed to the vicissitudes of the global equity market, and spread across a broad array of specialist asset managers, most of whom are investing in the less efficient corners of the financial markets.

Rigorous asset manager due diligence:

We start with the premise that most asset managers have no economically justifiable reason for remaining in business, as average market performance can be attained in most asset classes paying virtually no fees. As such, identifying the asset managers that will outperform their peers is not easy. This assessment of manager against chosen investment domain requires a combination of art and science, rooted in years of experience and learning from good and bad decisions. The best asset managers cannot be chosen in isolation but must be grouped with relevant peers for direct comparison of their teams, strategies, past performance, operations, terms and risk controls. Veteran specialists of each investment sector (sub-asset class within geographic market) must make these tough decisions, informed by a deep understanding of the specific sector of the investment world and the critical requirements for success in those sectors. The best managers will be passionate about their strategy and will have a significant portion of their own personal assets at risk against their success.

We have shaped our manager evaluation framework based on over 4000 asset managers we have evaluated (>10,000 screened) in the last eight years across all asset classes and geographic markets. This framework cannot be distilled down into a finite set of diagnostics, but rather is a dynamic model that varies by asset class, geographic market, specific strategy and economic environment. We believe that, to spot the most talented managers, "it takes one to know one". Accordingly, our team includes many veteran asset managers and face to face manager evaluation is conducted by our most senior team members.

Access to the best asset managers:

Inevitably, many of those asset managers we believe to be the best are closed to new capital and new investors. Partners Capital aims to exploit the rare openings with those managers by virtue of our reputation as loyal, long-term sophisticated investors who have the potential to contribute to the asset manager's success. We are experts on investment businesses with our core training in business strategy, finance and operations. Asset managers recognize our ability to be a true partner, offering insights on operational, team, financial and other critical requirements for building a successful asset management business. In addition, Partners Capital's community of shareholders, investment committee members and clients often bring valuable relationships with many of the leading asset managers which have led to exceptional access for Partners Capital.