Our Investment Approach
"Investing shouldn’t be a goal in itself, but a means to achieve your objectives. Our role as a Wealth Manager is to identify those objectives, and to construct and manage portfolios to achieve them, allowing you to sleep sound at night. This page explains our investment philosophy, principles and methodology. It should enable you to decide whether froots is a match for you."
David Mayer-Heinisch - CEO
Investment Philosophy
Our investment philosophy is built on four foundational pillars which are at the bases of any investment decision.
Value-Driven
At the core of froots’ investment philosophy is a commitment to value. We believe that value is the most important predictor of future returns, ensuring your investments are based on solid foundations rather than speculation.
Systematic
Our approach is systematic and disciplined, ensuring every decision is repeatable and methodical. This allows us to act consistently and counter-cyclically across varying market conditions, while continually improving and refining decision-making.
Personalized
By understanding your specific situation, goals, investment horizon and risk tolerance, we tailor investment strategies to align with your objectives. This personalized approach allows us to manage risk effectively and ensure alignment with your needs.
Passive/Active
We combine the best of passive and active investing, leveraging the advantages of ETFs for low costs and broad diversification, while also incorporating active management when opportunities arise. This balanced approach aims for stable, long-term growth with reduced volatility compared to fully passive market exposure.
Investment Methodology
We build our investment portfolios using a consistent four-step process that ensures each portfolio is well-diversified, cost-effective, and customized to meet our clients' needs.
1. Definition of Investment Universe
First we look at the historical correlation between asset classes. This reveals which asset classes perform well together under various market conditions. By integrating this data with the client's objective, risk profile and time horizon, each portfolio is tailored with a specific mix of asset classes that dynamically adjusts over time.
2. Valuation of Asset Classes
Then we look at relative valuation of the selected asset classes. Because emotional biases cause price deviations, froots uses a countercyclical approach to adjust exposure. We increase exposure to more attractive asset classes and reduce it when they become less appealing.
3. Valuation Within Asset Classes
Thereafter, we assess the attractiveness of regions and sectors within the equity stake. Based on relative and absolute value, weight adjustments are applied.
4. Independent Product Selection
Finally, we independently select the best possible financial products to meet the objectives of the client. We consider all financial product around the world and consider factors like cost, liquidity, tracking error, synthetic replication risk, and diversification to optimize risk-adjusted returns.
Always the right Asset Allocation
We don’t believe in one-size-fits-all. Your portfolio(s) are individually adjusted to their investment horizon, risk profile and the ever changing market conditions.
The graphic shows examples from long-, medium-, and short-term strategies.
The power of an investment horizon
Risk and volatility are not the same thing. In a well-diversified portfolio, volatility only becomes a risk as the investment horizon shortens. Therefore we accept volatility initially and reduce it over time to avoid unnecessary risk. That’s how we keep returns that are made early on safe.
Core Principles, a Strong Foundation for Success.
Full Independence
We would never buy our own products for our clients, or accept kickbacks from product providers. This allows us to act in their best interest at all times, without ever creating any conflicts of interest.
Skin in the game
Our founders and investment team invest most of their own funds alongside our clients, ensuring full alignment and total commitment to achieving the best possible outcomes.
Tailored solutions
Only after a mutual understanding about the client’s objectives is reached, a solid portfolio can be constructed. Therefore open and honest communication is a crucial element to the success of our partnership.
Attractive pricing
Technological efficiency allows our talent to focus on client contact and investment research. This enables tailored solutions with great service at a much lower price, and to a much broader audience.
Download our investment approach whitepaper
Want more details on how we build portfolios for you? Then download our investment approach here.