Disciplined research and decision-making in the face of market volatility

Given the recent market volatility, it might be tempting to panic and make short-term decisions that, ultimately, may mean you lose out over the long-term.

We’ve written about the importance of ignoring some of the macro trends causing this volatility - but this can be difficult, especially when the news and noise around world events comes from every direction.

This is as true for individuals as it is for companies.

It’s one of the reasons why disciplined research and decision-making are so important, and why they form part of our core investment beliefs.

This discipline is absolutely key in cutting through the noise and absorbing the information we need to make better long-term decisions.

It also means embracing the need to evolve with the investment landscape that is everchanging and ever evolving, and continue to provide meaningful solutions to our clients problems and investment objectives.

Disciplined research

So, how do we decide which solutions to provide and develop? For this we use our propositional pyramid.

At the base, we have our core offerings, made up of our funds and model Portfolios, which we believe provide options that will be suitable for most retail investors. For those that perhaps want something a bit more tailored, we have the flex layer, and finally, apex solutions, which provide completely bespoke options such as advisory stockbroking.

Having this framework in place means we can make our research much more relevant and targeted, as we can get much more granular, according to our Head of Investment Proposition, Rob Bell.

“In terms of our development process, one of the first things we do before we put any rubber on the road is research any trends and developments in the industry, using the fact that we’re centred so beneficially in the industry with access to so many asset managers, wealth managers and industry groups,” he adds. “We also conduct Partner and client testing. This is a real foundation of our development process: before we agree on a target state, we will have undertaken some degree of Partner and client research.”

As Bell mentions, one advantage we possess is our central location in the industry. We work with leading fund managers from around the world, and regularly communicate with them, getting their views and opinions. And, as we work directly with our Partners, we can also get a good idea of what they and their clients needs are.

“This means we have a much clearer picture and understanding of the segmentation of our end users and clients. This supercharges our ability to do effective research of what clients are looking for, what have we got on the shelf, and what are we missing, and therefore what we should be developing,” Bell adds.

Combining the insights of the fund managers we work with alongside the knowledge and opinions of our Partners and clients gives us an extremely diverse breadth of knowledge from which to call upon when making our decisions.

Evolving our thinking

Recent years have seen the investment landscape shift dramatically. We’ve moved from Brexit, to COVID-19, now to the current high inflationary period, with the ongoing war in Ukraine. Over this period, these factors have helped markets shift rapidly at times.

As a result, it’s been impossible for investors or wealth managers to stand still. The rationale for investment decisions needs to be constantly analysed, to ensure it remains relevant.

Our Portfolio Strategies manager Hamish Gibberd says he has seen the depths of our thinking evolve considerably since he joined a few years ago.

He says: “When I joined, it was clear we had a very rigorous, robust process with Select, Monitor Change. As we’ve embedded our investment beliefs, I’ve seen process evolve further.”

“The most obvious evolution is in the depth of thinking. For a few years now, we’ve been monitoring and recording inputs into our decisions at various forums. This now means we’re able to evaluate what constitutes a good or well-made decision. That’s not necessarily a good outcome, but was the decision sensible?”

This has meant that, as time has gone on, we’ve built a better picture of what constitutes a good decision and also a better idea of what the range of outcomes might be. Iteratively, over time, this has seen our decision-making improve from what was already a place of strength.

In times of market volatility, where external events make it impossible to predict short-term changes, it is important to make sensible decisions that give you the best chance of good outcomes in the long-term. This is why it is so important that disciplined research and decision-making remain a core investment belief.

This is the sixth article exploring our seven investment beliefs. Click here for an introduction to the series.

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select, and the value can therefore go down as well as up. You may get back less than you invested.

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