The Lower Risk Core
Our initial focus is on the lower risk core where the primary purpose is to preserve and prudently grow a client’s financial assets. The lower risk core includes contingency investments that provide the cash needed to fund living expenses and to meet shorter term obligations. To protect against the twin threats of inflation and deflation, a distinctive set of investments is held to hedge against each of these dangers. At the heart of the core and to provide for capital appreciation, is a foundation investment in a carefully selected and appraised group of managers investing in global franchise companies.
The Higher Risk Periphery
Outside of the core, on the higher risk periphery, resides a set of very specialized and expertly vetted investment opportunities in non-traditional strategies such as private equity, hedge funds, emerging markets, high yield, micro cap stocks and venture capital that are integrated only after thoughtful consideration.
The Risk Return Relationship
The conventional relationship between risk and return is often described as linear: higher risk results in higher return and lower risk results in lower return. The Plimsoll view of the risk/return relationship is multi-dimensional. Plimsoll recognizes that higher risk levels often contribute to lower than expected returns. By balancing asset allocation across carefully selected Core and Non-Core capabilities, it is possible to achieve controlled risk and attractive absolute total returns.
Diversification
The conventional view of diversification is that a more diversified portfolio results in lower risk and a less diversified portfolio results in higher risk. Plimsoll believes that higher diversification often translates into increased risk and lower than expected returns. By balancing asset allocation across carefully selected Core and Non-Core capabilities, it is possible to achieve controlled risk and optimal portfolio diversification.
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