Investment beliefs
ACC’s investment approach is driven by our investment beliefs, which is key to ensuring we achieve our long-term investment objectives.
Governance
1. Governance matters
The role of governance is to define desired investment outcomes, set risk tolerances, establish and maintain clear lines of accountability, define suitable processes and establish and maintain an active role in monitoring and reporting.
Fund purpose
2. Fund purpose should be clear
The fund should be clear about its purpose in terms of cash flows, time horizon, tolerable risks and the desire for intergenerational equity.
Asset allocation and markets
3. Asset allocation is the key investment decision
Asset allocation is the key driver and has the largest impact on both risk and return.
4. Diversification is beneficial
Diversification reduces risk and should applied to asset allocation, manager selection and active positions.
5. Markets are imperfectly efficient
While markets tend towards being efficient, we believe inefficiencies can arise in different markets at different times.
6. Markets are partially predictable over the long-term
Prospective returns are partially predictable and tend to be more so over longer periods. Investors with a long-time horizon can benefit from this.
7. Active management is difficult
We will tend to focus on areas of active management where we have an advantage and have demonstrable ability to add value.
8. Private markets
The business economics and risk of private and public assets are broadly similar over time. However, the skillsets required to manage private assets differ from public assets.
9. Ethical considerations are important
ACC’s ethical position, including on climate change, responds to, and is driven by, our stakeholders’ expectations and our commitments.
People and manager selection
10. People are paramount
Organisations with knowledgeable, skilled staff perform better over time than those without.
11. Manager styles do not consistently add value over time
Managers tend to exhibit investment styles. We believe that manager styles are not rewarded, nor consistently add value, all the time.
Execution
12. Costs matter
Costs are almost certain and erode returns. We should take account of all costs including fees, transaction costs, market impact costs and taxes.