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The Equiti Investment Philosophy

In the pursuit of our mission of helping people achieve their financial goals and dreams through effective wealth management:

The Equiti Investment Philosophy requires an Equiti adviser to focus on developing a tailored wealth management strategy solution that meets the specific requirements of each individual client whilst allowing the financial markets to do their work over a period of time.

As such, our investment philosophy requires for our advisers to become
strategy focused as opposed to being market focused.

By being strategy focused, an Equiti adviser takes a long-term trend approach to financial markets and invests their time identifying efficient wealth management solutions rather than averting their time and energy to the consistent buying, selling and restructuring of individual investment portfolios.

This way, we can be confident that clients are receiving a complete financial advisory service that avoids the dependency upon an individual adviser’s ability to form an accurate opinion on the many thousands of investment choices available through the Australian and International share and property markets.

Core plus Satelitte

The significance of portfolio construction is often overlooked as investors focus on diversification.

The Core plus Satellite method of portfolio construction subscribes to the widely accepted view that investors should have a diversified portfolio both across and within asset classes, where:

Core investments are broad based, low cost investments that capture the overall performance of the market and form the foundation (and majority) of a stable portfolio (i.e. Index Funds) and is used to:

        1. capture market performance
        2. reduce investment costs
        3. create a stable portfolio foundation

Satellite investments represent a smaller allocation of funds in each asset class and are designed to capture market opportunities and offer the potential for higher investment returns and is used to:

        1. add the opportunity for out performance
        2. add portfolio tilts in areas that add value, ie higher income
        3. employ your investment dollar where you can add value
        4. contain market risk in very defined parameters

Even more importantly, is that countless studies have concluded that very few managers have the ability to beat the financial market over the long term.

Bogle reports that out of 355 managed funds launched over the past 36 years, only 24 have outperformed the S&P 500 by more than one percentage point a year and just 3 have demonstrated a record of sustained out performance.

That means that less than 1% of fund managers have regularly outperformed the market!
It is for this reason that the Equiti Investment Philosophy encompasses a Core plus Satellite approach to wealth accumulation.

what is a Index?

Most investment markets have an Index that measures its value over time. For example, a Share Index (such as the All Ordinaries Index or the ASX200) measures the change in value of the shares included within that index

An Index Fund, therefore, is an investment product that comprises the individual shares that make up the Index.

As opposed to the traditional investment fund manager, an Index Manager does not try to outperform the market and pick individual share winners (or losers). Rather, the Index Manager invests in a large representative sample of all the shares that make up the index.

With broad acceptance in the institutional market, Index Managers are increasingly being used instead of the more traditional single Fund Manager or direct share approach. This style of Index Management is becoming widely accepted as historical evidence proves that most active Market Focused managers struggle to outperform the Index over time.

By adopting a ‘buy and hold’ approach, the cost of investing can be significantly reduced and will ultimately lead to better returns for investors in the long term (especially on an after-tax basis).

There is no doubt that the abundance of investment styles coupled with the many varied asset sectors available are making investment decisions increasingly complex. Since Index Funds invest in all or most of the securities within a particular Index, they provide solid diversification and therefore lower risk to the investor.

With such a wide and varied choice of investments: how does one make an educated and informed decision with some degree of confidence?

At Equiti, we believe that the answer is Indexing.

Why Indexing?

Indexing was first introduced in the United States in the early 1970s as an alternative to traditional active investing. Indexing is now a popular investment strategy for institutional and individual investors around the world.

Warren Buffet (the world’s most successful investor and now its Richest Man) recently had the following to say about Index Funds:

“If your goal is not to manage money in such a way that you get a significantly better return than world, then I believe in extreme diversification.

I believe that 98 or 99 percent – maybe more than 99 percent – of people who invest should extensively diversify and not trade. That leads them to an index fund with very low costs”.

In Australia, index funds now exceed $120 billion or 10 per cent of the total investment management market. So, what does indexing offer? 

Long-Term Performance History

 Indexing has a proven long-term performance history in all the major asset classes. Historically, few active managers have been able to sustain above benchmark returns after costs over the long term. 

Low Cost

Indexing’s ‘buy and hold’ approach can significantly reduce the cost of investing over time. This factor, once combined with the low management costs associated with Index Funds, means that investors can keep more of the returns they earn. 


Tax can potentially take the largest chunk out of an investors return. Therefore, it is important to focus on the real investment return, after-tax.

Because of its long-term nature, indexing takes advantage of capital gains discounts and the deferral of capital gains liabilities, which can improve after-tax returns. 


Since an Index Fund invests in all or most of the securities within an index, by default, they provide solid diversification. Diversifying across a range of asset sectors, industries and individual securities reduces market risk and can improve performance potential. 


It is very difficult to continually pick winners and outperform the market over the long term. Index Funds take the guesswork out of investing by providing a low cost way to gain exposure to investment markets.

Jesse Livermore (a very successful investor in the early 1900’s) has coined the phrase:

“The Trend is Your Friend”

At Equiti, we believe that our understanding of financial markets moving in an overall trend pattern gives our clients a safer, more secure and confident way to acquire investment assets.