Seed’s core investment beliefs and philosophy

Seed’s beliefs and philosophy can be summed up as long term in nature, a definite bias to value and with an overriding theme of capital protection. Expanding on what we mean across these three core areas of the philosophy takes place below:

Long term investment horizon

• A longer-term investment strategy is crucial to help drive longer-term wealth creation. Because asset prices tend to move in cycles around mean valuation levels, each demands minimum time horizons, which is essential for an investor to fully benefit from investing.

Value bias

• Firstly, the definition of Investing must always be remembered as the process of giving up something now in order to receive something (preferably more) in the future. Taking risks in investments refers to giving up something known now without always being certain of what your return will be in the future. The possibility exists that what you get will be less than your initial investment and more or less than what you expect. Investing therefore involves trading the known for the unknown, with potentially higher returns possible only at the cost of greater risk.
• It is essential to distinguish between the price of an asset and its value. As Warren Buffett says, “Price is what you pay but value is what you get.” In other words, it’s easy to pay the price asked of any asset or investment, but the question needs to be asked, has the appropriate value been received. Following on from this, the price paid relative to the value received will ultimately determine the return achieved. This is one of the most important tenets to investing.
• Investing for long-term wealth creation is therefore best achieved by buying into value investments and funds that endorse a value investment approach. This incorporates a sensible, businesslike approach to every single investment made. Again Warren Buffett, quoting Benjamin Graham, “Investment is most intelligent when it is most businesslike.”

Capital protection

• Capital protection is essential to the attainment of long-term superior returns. While not possible to always identify all known risks and to completely mitigate them, it is important to reduce overall portfolio risk to an acceptable level. This incorporates sufficient diversification across geographies, asset classes, investment sectors, and funds. It also means including funds with downside risk protection as a major priority.

Seed - prudent stewards of wealth