Hollard Investment Philosophy & Process

Hollard Investment Philosophy 

The Hollard Investment Philosophy is to compound incremental outperformance over time and to do so by taking less risk than the market. We believe that by controlling the volatility within our solutions, we can smooth returns and provide clients with more consistent outcomes. Our investment philosophy is to avoid unnecessary volatility in delivering our solutions and that helps us avoid what we term the "volatility tax" - the underperformance investors experience in the presence of excess volatility.   

Consistency is key 

Consistency isn’t exciting. It’s essential. It is the day-to-day slog that, over time, allows investments to compound and grow. Often when funds are compared, they are done so on a return’s basis.

However, not all returns are created equal. In the illustration below, we have compared two funds that both delivered 6,9% per annum (measured over a 10-year period). However, manager A’s fund was more volatile than manager B's (manager A’s annualised standard deviation was higher than manager B’s). If you invested a lump sum of R 1 million, as illustrated below, you would have ended up with the same investment amount at the end of 10 years. However, the journey would have been substantially different.

However, if you invest a lump sum, with a monthly debit order, and invest ad-hoc additional contributions, the picture looks vastly different. The graph above illustrates a client that also made a R1 million lump sum investment. However, they also contribute a monthly amount (20% of salary, which increases 7% every year). The client makes an additional contribution annually (50% of their bonus, which is 25% of their salary). The impact of the difference in volatility of the two funds amounts to R1.2 million. 

 

The Hollard Investment Process

The Hollard investment process gives expression to the investment philosophy. The process ensures continuity in the delivery of a promised outcome, giving investors the comfort of knowing that the outcome being generated will continue to be delivered day in, day out, over the long term.