Wilson, formerly head of investments at Towry, said the “third iteration” of his investment process as a founding partner of the fledgling firm was designed to fit with a client’s financial planning needs, not as a standalone investment solution.
He said the strategy was built on the belief that returns across the board will be lower in the future than they have been previously, reflecting a consensus among investment managers.
“I think we have to accept that returns are likely to be lower going forward. Lower returns and higher volatility together is not very attractive,” Wilson said.
Lockhart Capital Management, which has only recently invested the first of its client money, is formed of Wilson and four other Towry-alumni, Jon Bowes, Chris Cole, Toby Alcock and Bryan Innes (pictured), who are spread across three offices in Surrey, Leeds and Aberdeen.
The firm offers financial planning and private investment management for high-net worth clients.
In a move away from his pioneering risk-targeted solutions of the early noughties, Wilson said he introduced the substantial cash overlay strategy in order to deal with market dips and corrections this time around.
While the strategy isn’t in action now, it will allow Wilson to slash the gross investment of the portfolio to 70% and hold up to 30% in cash if his five market signals warn that conditions are deteriorating.
The five signals are trend, momentum, breadth, risk and sentiment. They are not an attempt to time the market which Wilson said is an impossible task that risks “ending up in the same place you started”, but with a lot of volatility along the way.
Instead the cash position aims to protect clients’ capital from market losses and ensure there is enough liquidity to find new opportunities when markets begin to improve.
