By Georgdie Asprey

Some asset managers are pinned to growth. Others are locked into value.  

At Elston, we’re not value or growth. We’re both. 

In industry terms we are what could best be described as style-neutral. 

Being style-neutral means that we’re not limited to one style within portfolios. We do this because we believe that pinning ourselves to one style makes it harder for investors to access the wide range of opportunities that generate consistent returns over the longer term.  

Financial markets are dynamic. Accordingly, the drivers of a portfolio’s return will evolve over time. So, it’s important to be able to move with the markets. 

Our portfolios are built using a style-neutral approach. A style-neutral manager constructs their portfolio to reflect changing market conditions and avoids adhering to a restrictive, strictly value, quality or growth-based approach for equities or credit and/or interest rate sensitivity within fixed income. This approach provides access to a broader opportunity set of inefficiencies within markets and allows portfolios to better navigate the volatility that arises as different styles come into or fall out of favour. 

To us, a style-neutral portfolio is one in which we can objectively identify and assess opportunities without bias. We examine the factors that are likely to impact future returns from all perspectives.  

Single style-driven investing can cause investors to be constantly exposed to one style’s performance volatility. A style-neutral can help you to avoid this, and we believe that provides an allocation advantage. 

There have certainly been periods when growth managers have done well. And there have been times when value managers have been happy. However, when you look at performance, on average, style-neutral managers have delivered consistency over the long term.  

Single style investing is cyclical. It works for a while (potentially for prolonged periods) and then it doesn’t. That’s something we’ve certainly observed with growth investing recently. For those on the wrong side of the trade, when the reversion to the mean finally comes, the drawdown can be painful. 

The objective of Elston is to deliver repeatable and sustainable outcomes for our investors. We believe a style-neutral approach offers the flexibility to explore a more comprehensive opportunity set. It allows for genuine diversity, while assisting in the preservation of capital by avoiding risks endemic in single style investing. Moreover, we gain a research and informational advantage by understanding the changing fundamentals across asset classes giving us the best opportunity to deliver on this objective. 

If you would like more information please call 1300 ELSTON or contact us.