NAVIGATOR

USING THE PERPETUAL PORTFOLIO FRAMEWORK TO NAVIGATE ALL MARKET ENVIRONMENTS

May be Suitable For

  • Investors seeking true asset allocation diversification that offers capital appreciation and protection through all market environments: inflation to deflation, growth to crash.

  • Investors who believe that the Traditional 60/40 portfolio leaves them exposed over the market cycle.

  • Investors who are worried about the potential for large market sell offs or take comfort from having an approach focused on reducing portfolio drawdowns.

  • Investors who believe in accumulating wealth over the long run.

Strategy Facts
Investing Style Active
Allocation Type Diversification by Market Regime Baskets
Approach Perpetual Portfolio Framework
No. of Risk Profiles 4
Risk Profile Calibration Risk/Defensive Asset Split
Holdings Universe UCITS V Fund & ETF Universe
Currencies Available EUR/GBP/USD
Minimum Investment 100,000
Annual Managament Charge 0.875%
Ongoing Charge Figure 1.175%
Diversification By Market Regime
Preferred Assets by Market Regime

The Navigator managed portfolio strategies are rooted in an approach to investing we call the ‘Perpetual Portfolio’ asset allocation. The Perpetual approach seeks to diversify an investment portfolio by allocating to strategies, which we refer to as investment baskets, and asset classes that historically perform best in a given market regime. Each basket thrives in a particular market environment, but can also support returns in less optimal conditions. Weightings between the investment baskets are optimized so that the allocation is equally weighted to each quadrant: inflation to deflation, growth to decline. In being prepared for all market conditions, the perpetual portfolio allocation can navigate all market environments: improving market resilience, reducing large drawdowns and maximizing risk-adjusted returns.

Navigator Investment Baskets

1.Secular Growth Assets

(e.g. equities)

 Outperform during periods of robust economic growth and thrive in low interest rate environments.
2.Interest-Rate Linked Assets

(e.g. government/corporate bonds)

 Outperform during deflationary periods and thrive in falling interest rate environments.
3.Trend/Momentum Strategies

(e.g. Commodity Trend Advisor [CTA] Strategies)

 Capitalize on trends higher in asset prices during inflationary periods and lower during deflationary periods.
4.Fiat Alternative Assets

(e.g. precious metals)

 Can act as protection during periods of decline and protect the portfolio from excessive monetary/fiscal policy.
5.Defined Return Strategies

(e.g. structured income)

 Delivering defined returns whilst minimizing capital at risk except in the harshest of environments. Outperform in quiet or range-bound regimes.
6.Physical Commodities

(e.g. oil, grains)

 Outperform during inflationary regimes and thrive when demand outstrips supply.
7.Volatility

(e.g. portfolio insurance)

 Outperform during periods of decline and benefit from a sudden/unexpected change in market dynamics.
8.Cash Equivalents

(e.g. central bank overnight lending rates)

 Outperform during risk-off periods and can enhance long term returns through dollar cost averaging.
THE PERPETUAL APPROACH: A Modernisation OF THE PERMANENT PORTFOLIO

We consistently research the means to improve upon our investing approach. One of the pieces of research we had historically come across, and sought to improve upon, was originally designed in the 1970’s by (at that point), a little known finance professional in the US called Harry Browne.


Harry Browne had a different starting point than many other investors in that he sought to define four economic scenarios (The Four Quadrants): Inflation, Deflation, Growth and Decline. He comprised an allocation that had equally weighted exposure to each quadrant:

- For Growth environments: a 25% allocation to Equities.
- For Deflationary environments: a 25% allocation to Bonds
- For Decline environments: a 25% allocation to Cash
- For Inflationary environments: a 25% allocation to Gold.




Coined 'The Permanent Portfolio', his work has stood the test of time. In our work, we determine an equally weighted allocation to Global Equities, Global Bonds, Cash and Gold would have returned 7.40% annually between 1971-2022. Its annualized volatility would have been 7.05% and maximum drawdown over the period of 16.80%.


The financial world has come a long way since the 1980s. The introduction of electronic exchanges, derivatives, volatility, algorithmic trading, the list goes on. It makes for a very different investing landscape than the 1980s and had Harry Browne undertaken his work today, he would likely have utilized the tools now at his disposal. Navigator's belief firmly rests in Harry Browne’s initial work. An asset allocation should be prepared for all economic environments, it shouldn’t need consistent market timing and by reducing portfolio drawdowns, long term returns, and wealth generation can be greatly enhanced. Navigator aims to modernize and enhance Harry Browne's initial work bringing into the 2023 investment landscape.

THE FOUR QUADRANT APPROACH

The four quadrant approach refers to the recurring stages that financial markets and economies go through over time. It is our belief that any recorded period of economic history can be broadly described by one of these four economic circumstances: Inflation, deflation, growth, and decline. The duration and characteristics of each regime can vary significantly from one market cycle to another, and their behaviors are impacted by various factors, including fiscal and monetary policies, geopolitical events and market psychology. The key to long term wealth generation is to have a portfolio allocation that is able to navigate all four quadrants and is prepared for potentially influencing factor effects. We have found that traditional approaches are very well suited to two of these environments but not the other two leaving them exposed over large parts of the market cycle. This exposure increases the likelihood of traditional investors experiencing extended periods of wealth destruction.


IMPROVING DEFENSE: DIVERSIFICATION IN DOWNSIDE PROTECTION

Traditional assets such as bonds do well in decline, yet Gold, Trend/Momentum and volatility strategies can do well in decline and inflation. The Navigator Strategies offer a more robust defensive lineup.


WHY CONSIDER NAVIGATOR AS YOUR STRATEGY FOR FINANCIAL FREEDOM

• Over the past 20 years, financial markets have been driven by expanding monetary policy, falling interest rates and little to no inflation. With inflation now firmly above trend and interest rates rising around the globe, headwinds are beginning to form for traditional allocations. 2022 was in the top 5 drawdowns for traditional 60/40 ever and peak to trough it still hasn't recovered.


• A belief the wealth is created over the long-term. Whilst conditions may change your portfolio needs to be built to navigate the full market cycle 3/4 times over.


• Being prepared for all conditions gives investors the peace of mind. Investors shouldn't have to accept losing over a third of their wealth because 'market conditions' didn't suit.


• Navigator can increase diversification of a larger traditional portfolio, helping to reduce drawdowns and improve market cycle navigation.


GET IN TOUCH

For more information and answers to any questions you may have, please contact us.

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