Our purpose is to maintain and grow the real value of endowments, while providing a stable stream of income, to help our investors achieve their long term aims.
Investing perpetuity capital allows us to be both opportunistic and patient, enabling us to see through short term volatile markets.
Our investment philosophy consists of four pillars that shape our decision making. It enables us to refine the investment universe and identify world class investment opportunities whilst maintaining capital in order to generate significant real returns.
Managing perpetuity capital enables us to engage in research and investments that groups focused on short term benchmarking simply cannot. We pursue fundamental investment research across asset groups where we believe tensions, changes or inefficiencies in economies and markets provide investment opportunities. We then find the most appropriate way to pursue these in specific investments in the portfolio.
We believe that, in most circumstances, active management with the right investment group leads to superior returns. We build constructive relationships and interact regularly with managers, partnering for the long term and across market cycles. We look for those who have their own capital at risk on the same terms as us, seek capital gains and not growth in assets under management, and constrain their focus to areas where they have world class expertise. We expect our investment groups to behave like business owners, with deep fundamental research and understanding of a business and industry giving them credibility with the senior management teams of those companies.
We believe that owning equity in productive businesses is the best way for us to achieve our investment objective. However, we recognise the cyclical nature of markets and we also invest in assets where returns are not dependent on the broader equity market cycle, such as property and credit. Alongside this, we diversify the Fund across strategy, geography and sector. This means that there are several independent routes to meeting our return target.
Effective risk management is a mindset, ingrained in our company culture and investment philosophy. As part of this, we constantly evaluate a range of metrics and exposures to ensure that our fundamental views produce an optimal portfolio positioning. We question where we might be wrong, and how the portfolio might behave in a range of different circumstances through scenario modelling. This prevents us from carrying inadvertent risks in the portfolio and ensures we are ready to adapt to change.
Our team has the freedom to make investments today that may not come to fruition during their lifetime. We pursue long term themes across asset groups, where we believe tensions, changes or inefficiencies in economies and markets provide investment opportunities.
We build constructive relationships, partnering for the long term and across market cycles. The stability of the Fund’s long term capital helps us secure allocations in the most sought after investment groups.
Our investment philosophy is designed to refine the potential investment universe. We look for investment groups that have: aligned interests with their investors; deep expertise in their chosen markets; a small number of holdings; exceptional understanding of their investments and constructive relationships with OUem.
Before any investment is made, we complete a detailed due diligence process to ensure an idea matches our expectations. This involves significant analysis of the investment thesis and its ability to contribute to the long term objectives of the Fund, and extensive operational due diligence to ensure robust infrastructure and controls. We spend considerable time understanding the teams and individuals who will steward the assets.
We have an ongoing dialogue with our investment managers to ensure a full understanding of progress against the stated strategy, assets held and potential risks within the Fund. We prefer groups whose investment style is to hold a concentrated number of companies and engage with their management teams regularly, acting as business owners.
To be an effective long term investor, risk analysis is an integral part of our investment decision making and portfolio management. We constantly evaluate a range of metrics and exposures to ensure that our fundamental views produce an optimal portfolio positioning. This includes analysis of environmental, social and governance risks.