LGT Wealth Management

Our Investment Philosophy is called “quality, sustainable-growth”

We are long-term investors with a global perspective. Our bottom-up investment approach is grounded in fundamental analysis and proprietary research. We construct high conviction active portfolios of 40-60 direct holdings, with an emphasis on quality companies which are the beneficiaries of global structural growth trends.

Beneficiaries of structural growth trends
We seek investments that are rooted in structural growth trends, which are less dependent on the economic cycle and are more sustainable over the long-term. A company that can sustainably grow its revenues, profitability and cash flows will be more valuable in the long-term, which should ultimately be reflected in the share price. Structural trends provide a tailwind for growth in the companies we invest in.

Quality, visible earnings and a clear path to growth
We rigorously assess the financial, ESG and operational quality of the companies in which we invest. The key characteristics we look for include recurring revenues, earnings visibility, strong balance sheets, wide competitive-moats, pricing power and cash generation. The quality of a company's management is crucial, especially in capital allocation decisions.

Portfolio construction and active management
We set out to construct portfolios that are resilient for the long-term and which meet our client’s objectives. In an ever- changing environment, we actively manage portfolios to position for the risks and opportunities ahead. We adopt a fundamentals driven, bottom-up approach to investing whilst remaining thoughtful at both a strategic and asset class level and in the composition of the equities we invest in.

Specific to the objectives, risk profile and governance of the charity (attached in separate document).

We construct portfolios with direct investments in global equities, corporate debt, government debt, alternatives, and cash.

- Equities are the engine of long-term capital growth.
- Fixed income offers diversified returns, lower volatility, and income.
- Alternatives are also held to provide diversification and income.
- Cash provides fire power for new ideas.

Asset Allocation is underpinned by the “LGT Capital Market Assumptions” and in-depth annual exercise conducted across the group.

We favour a global, direct investment approach and the majority of the portfolio will be made up of investments in individual securities that align with our quality sustainable growth philosophy and process

At the margins we may selectively use best-in-class third party funds that have undergone our rigorous funds selection process. A potential third party solution must genuinely offer a capability and access to an opportunity set that is very hard to us to reach. As a global asset management business our proprietary research and access is broad and deep.

Risk in portfolios is monitored and controlled in a number of ways including the following:

• We consider risk in terms of permanent capital loss and therefore, when researching an investment idea, we put considerable focus on its quality characteristics.

• Asset allocation decisions are considered as part of ongoing portfolio construction and risk evaluation. Our investment team are supported by pre- and post-trade analysis on risk factors within portfolios and portfolios are routinely stress tested against historic and hypothetical events.

At the point of opening your account we would establish portfolio guidelines and restrictions which are then enshrined in our daily management tools and systems.
From an operational perspective, we have robust tools and systems in place to monitor and manage individual portfolio risk.

Our dedicated Client Investment Governance Team are independently responsible for monitoring the management of all charity portfolios to ensure that they are managed in line with their mandate (including investment objective, risk profile and any investment restrictions) and that the investment process is being applied consistently.

Investment managers have access to real-time systems to monitor portfolio characteristics and deviations from the agreed strategy. The client Investment Governance Team will escalate and unresolved breaches to highlight these to the relevant portfolio manager who will either take corrective action or provide a valid rationale and explanation for why these positions should remain. Where explanations are acceptable and further review is required at a future date, these cases are captured on a monthly Known Exceptions Report where they continue be monitored and appear until satisfactorily resolved. All deviations from investment strategies are monitored through an independent risk and client governance team and require regular justification of investment suitability.

Mandatory training including compliance, is issued on a monthly basis by the Risk and Compliance team.

Specific to the objectives, risk profile of the charity and the specific strategy that has been proposed. (Attached as a separate document)

Yes, custody is included within the cost of our annual management fee. However we split this out as a separate charge which does not attract VAT, minimizing the cost to our clients