After nearly two years of running our first fund, the CCM Intelligent Wealth Fund, we have decided to launch our own discretionary fund management, DFM, service for Independent Financial Advisers and their clients.
Like our fund, our DFM service will be like no other DFM service in the country. We will offer a service to meet the needs of all types of investors with relatively unique yet proven strategies.
The core strategy for medium risk investors will be based unashamedly on Bridgewater Associates’ All Weather Strategy known as the Pure Alpha Fund run by the legendary hedge fund manager, Ray Dalio.
Bridgewater Associates is the largest hedge fund on earth with $160 billion in assets under management. It is not open to new investors. Whenever it does accept new investors they have to be institutions which have a minimum of $5 billion in investable assets and at least $100 million to invest. So such a fund is not available to the man in the street.
His Pure Alpha Fund, according to Barron’s, has lost money in only 3 calendar years over 20 years.
According to Ray Dalio every investment has an ideal environment in which it flourishes, in other words there is a season for everything.
Ray has confirmed that there are only four things that move the prices of assets:
1. Inflation
2. Deflation
3. Rising economic growth
4. Declining economic growth
And there are only four different possible “environments,” or economic “seasons,” that will ultimately affect whether investments (assets prices) go up or down (except unlike nature, there is not a predetermined order in which the seasons will arrive):
1. Higher than expected inflation (rising prices),
2. Lower than expected inflation (or deflation),
3. Higher than expected economic growth, and
4. Lower than expected economic growth.
He knows there are good and bad environments for all asset classes and that in one’s lifetime there will be a ruinous environment for one of those asset classes. Therefore you should have 25% of your risk in each of these four potential economic environments.
The All Weather Portfolio
30% shares e.g. an index.
15% medium term government bonds (7 to 10 year terms)
40% long term government bonds (20 to 25 year terms)
7.5% gold
7.5% commodities
The returns have been very consistent. Shares give you excellent returns over the long term but they are very volatile. Government bonds give you less volatility. Gold and commodities give you protection against inflation. So there is something for every season.
We will be offering investors the option of investing into a momentum investment strategy devised by Fund Expert.
We will be offering a strategy based on the Magic Formula of Joel Greenblatt which has a proven track record of excellent returns over 40+ years based on investing in US companies with very low price earnings ratios and high returns on capital employed. We plan to introduce a UK version of the Magic Formula.
Last but not least we plan to include our very own CCM Intelligent Wealth Fund within our DFM service.
So do look out for the launch of our DFM service. You know it makes sense.
