Insights - Investment Philosophy
We believe that systematic mistakes by investors, combined with structural and temporal features of markets, create security mispricings. Extensive empirical evidence supports this belief. Our disciplined and systematic process exploits these mispricings, seeking to build high risk-adjusted return portfolios for our clients. Southsand also recognizes that markets are adaptive, that investment strategies go in and out of favor, and risk/reward relationships change over time. We acknowledge the importance of recognizing shifts in the market environment and knowing the value of different pieces of information at different points in time across global markets. We also know that, at times, even the most sophisticated stock selection attributes will converge towards temporary macro risk trends. Managing these risks is paramount to the long-term success of any given strategy. Southsand has long believed that environmental, social, and governance (ESG) considerations go hand-in-hand with traditional investment issues, having implemented ESG criteria into our investment process in the 1990s.
Our long-term success depends on whether we can add sustainable value to client portfolios. This value primarily comes down to performance, but also from our emphasis on quality across every aspect of our business – from client service to investment communications, from administration to corporate governance. That’s why we focus only on those markets, asset classes and strategies where we believe we have the resources to underpin such a commitment to sustained value. We think carefully before entering new markets; and we try to manage growth at a rate that does not compromise the standards our clients expect of us.
We have a strategy for growth based on achieving long-term results for our existing clients, while also improving the distribution and penetration of our products among new client markets. To achieve our ambition, we rely on attracting and retaining bright, motivated individuals focused on working diligently, efficiently and with integrity. We look to foster a workforce that is mindful of its responsibilities to one another and of our wider corporate responsibilities as a firm.
Since southsand beginning, we have valued a culture of openness, mutual dependency and collective purpose. We organise our fund managers in teams, so every one of them has a voice. And by following investment processes that are clear, systematic and where all information is shared, we think this leads to better outcomes than if a star fund manager were in charge. We strongly believe that the combination of experienced hands and fresh minds invigorates our thinking and can lead to better performance. That’s true in every aspect of our business – not just our investment teams.
We expect everyone at Aberdeen to work to the best of their ability in the interests of our clients, end-investors and shareholders. We strive never to sacrifice long-term good for short-term gain, and we seek to set the standards for good practice as investors and as a public company. We recognise that conflicts of interest can arise – we manage them by being transparent, open and making clear where we believe a course of action is unwise or unethical.
Financial markets are fickle and experience has reinforced our natural scepticism. At Aberdeen we rarely take what markets say on trust. Our skill as asset managers lies in our willingness to ask questions, to buck consensus if need be, and to do our own research to arrive at clear judgements. This attitude informs how we approach our business overall. We encourage everyone to think afresh and not do something just because ‘that’s the way it has always been done’. By constantly asking questions we aim to arrive at better answers
At Aberdeen, we have always had a strong cultural identity and we want to present the fundamental attributes of this – predominantly our focus on teamwork, long-termism, openness and simplicity. But we also recognise that, as the company grows, our culture has to be actively articulated, shared, managed and monitored across our global offices. Our Culture Committee, which is comprised of representatives from the Board, Risk, Compliance, HR, Communications, Corporate Responsibility and Brand departments, is tasked with looking at the culture we currently have and how we can better safeguard, manage, monitor and improve it.