by David Blumenthal KEY POINTS:
• In the days immediately following the Brexit result, the Australian sharemarket traded down nearly 5%, partly on fears of a broader global economic slowdown. Those investors who held their nerve during this time (consistent with our recommendation to clients) saw the market subsequently rebound strongly and more than fully recover all those losses within the space of 8 days.
• This volatility is an example of some of the challenges facing investors in the present environment – especially those who tend to question or abandon their investment strategies for fear of loss. It is also a prime example of how a disciplined platform like Six Park – guided by the deep expertise and experience of our world-class Investment Advisory Committee – can help investors stay the course with their investment strategies and avoid common emotional/behavioural mistakes that undermine investment results.
You might ask how a highly automated investment management service (like Six Park) can be helpful when financial markets crash or become highly volatile? That is usually one of the first questions considered by investors assessing a robo-advice platform. There’s a good reason for this too, because the way automated investing platforms are described often leaves out the most important element: the people behind the technology.
There’s no doubt that a proven investment methodology, slick algorithms and an intuitive interface are very important features. These are the reasons that the robo-advice industry has been able to rapidly capitalize on the smart but un-sexy concept of low-cost passive investment strategies and is expected to manage over US$2.2 trillion of global funds by 2020 (according to A.T. Kearney estimates).
However, despite the “robo” label, a highly automated investment management offering needs to instill trust and confidence. This is best achieved by the quality of the people behind the technology and in particular the caliber of the investment team behind the automated advice. It is this human overlay, and the strategic advice and oversight provided by it, which should form the basis of trust and confidence behind the recommendations provided to clients.
This stewardship is particularly important during times of market turbulence or extreme volatility, when investors typically panic and make poorly advised, emotion-driven investment decisions. The recent Brexit announcement was one such example.
At Six Park, our Investment Advisory Committee meets monthly to discuss local and global markets and economic conditions, to consider any changes to asset allocations for each investment strategy and to assess Exchange Traded Funds to ensure our clients are invested in the best investments available on the ASX. Where needed, the Investment Advisory Committee also advises management on general business strategy and technology initiatives, regulatory and compliance matters, and system security and reliability.
Our Investment Advisory Committee includes Former federal finance minister Lindsay Tanner, the founding General Manager of the Future Fund, Paul Costello, and founding Future Fund Director and former Chairman of JP Morgan Australia, Brian Watson.
From the “recession we had to have”, to the dot com and mining boom years, to the Global Financial Crisis and the tech revolution, the members of Six Park’s Investment Advisory Committee and management team have experience navigating through these turbulent times.
The real key here is that this is a very active and involved group. If there is a major local or global issue affecting the markets, the Investment Advisory Committee convenes immediately to discuss if action needs to be taken to make changes to the investing strategy, which we communicate with our clients in real time.
So the answer to “What happens when something goes wrong in the markets?” is clear. With Six Park, the most experienced people in the financial industry will be looking at how your investments are affected and if changes need to be made.
That means you can trust that your investments will be managed by experts who are best prepared to weather the storm, and give you the guidance you deserve.