The asset management industry has been plagued by decades of institutional thinking. This kind of thinking has led to an investment industry that is not built for individuals and their investments, but more for large pensions, insurance companies and foundations that have exceedingly long time horizons and make decisions based on statistics like tracking error and information ratios. The core of how large institutions manage money caters to these large institutions and is the basis on which they have developed their investment strategies and philosophies and how they present their results.
It became apparent after years of tracking and assessing investment managers that the history of managing money relative to benchmarks had engrained several habits in portfolio managers and the organizations around them that led them to be ‘closet-indexers,’ unwilling or unable, within the confines of their institutions, to make the active investment decisions around managing risk or enhancing returns that their clients expected from them and that they are indeed being paid to make.
Many of these organizations have proven to be formidable at increasing their assets under management, while we feel they have lost sight of the needs of the individual investor.
At Redwood we believe that investors deserve a set of investment solutions that are actively managed and deliver on the outcomes that Canadian investors want for their portfolios.
We believe that to pay fees for active money management, funds should be actively managed. We hire portfolio managers that have a history of active security selection and exhibited risk management. We believe that by designing mandates that complement the portfolios of Canadians and hire some of the world’s best investment talent, that we are building better outcomes for the wealth of our investors.
“Helping Build Better Portfolios for Better Investment Outcomes”
At Redwood, we believe that it’s important to partner with investment firms that are built to make active investment decisions, in an effort to skew investment outcomes in favour of our clients. We call it unconstrained thinking, and it takes into account both the portfolio managers’ investing philosophy and also the structural aspects of their organizations that allows them to actively pursue superior risk/reward opportunities in the areas in which they invest.
We also focus our funds in areas of the market where we believe that active investment management can add value. Whether our fund manager is selecting a company in which to invest in Malaysia, a preferred share in Canada or making a bold call on the US bond market, our mandates are built to complement your core holdings and to be building blocks in creating better portfolios.
“Closet-indexers” have given the asset management industry a bad reputation, and are one of the key reasons for the significant growth in indexed strategies. By focusing on truly active managers, focused on areas of the capital markets that are less efficient, we aim to deliver better outcomes for advisors and their clients.