What We Do

LIO provides advice across the complete cycle of Investment Management. From objectives setting, through portfolio formation, the process of external manager selection, through to performance and risk oversight and review, the LIO can help you understand best practice, and how to get from where you are, to where you would like to be.

LIO also welcomes general, philosophical discussions about investing and financial markets, for any size of investor. We have acted for clients ranging from £1 million, to £20 billion. Our asset manager relationships manage amounts varying from $250 million to over $4 trillion.

What are your objectives and why? What could de-rail your strategy and what can you do to mitigate this?

 

Diversification – the only free lunch in town

Financial markets are inherently unpredictable, and all investors seek to gain every advantage available in them.

Rather than trying to predict which assets will outperform over any given time-period, investors should accept uncertainty and suitably diversify their bets.

Simple portfolio mathematics will show that a suitably diversified portfolio will have a far better ‘risk-adjusted’ return than a concentrated one.

It's not just about Asset Classes

Diversification of risk works in all dimensions. As well as Asset Classes, investors should look to diversify other types of risk that they run. Asset Manager Risk, Return ‘style’ risk, Asset ‘type’ risk, Operational Risk, Legal risk, and Supplier (‘OSP’) risk can all be diversified.

There is a trade-off between diversification, and operating cost and complexity, but without identifying and pursuing this, it is unlikely that investors will hold the optimal portfolio.