Providing one is sensible, there is no reason clients cannot benefit over the longer term by exploiting riskier options such as equities, says Buchanan. By ‘sensible’ investing, he means “avoiding the greed and the short-term fads” and engaging in old-fashioned “boring investment management”.
It is the same technique he uses to best his children, now fully grown adults, on the tennis court. “You don’t go for the winning shots or try to be clever. When the ball comes over the net, you lob it back. You wait for the opposition to make a mistake.
“Like investing, it is about steering that middle course because over a longer time period, the compounding effect will be far greater than trying to be clever and show your clients meteoric short-term returns.”
Although 2016 revealed some tantalising short-term opportunities, driven largely by currency movements as opposed to fundamentals, Buchanan feels wealth managers should not try to capitalise on these trends at the expense of diversification.
“When one sees movements in markets and sectors that are short and sharp, I would say buyer beware because things never go in one direction the whole time.
“As with everything, you do it with your eyes open and in an appropriately diversified way. The key is making sure the rest of the portfolio is sufficiently diversified to withstand any detrimental effect those short-term moves may have.”
Buchanan has chosen to cut through the political noise in Europe, the UK and the US, focusing instead on recent underlying numbers. So far this year, he has upped his exposure to Europe, citing confidence in the “economy’s ability to adjust to certain circumstances that defy previous beliefs.”
In his view, the team is still taking “a fairly unaggressive approach”, as all of WH Ireland’s portfolios contain a gold hedge. “There are gold bulls and people who hate gold but, as an asset class, it is still an important component of portfolio design at certain points in the economic cycle,” he says.
