Investment philosophy

Tailored investment advice and strategy

Our Investment Philosophy sets out our principles and investment beliefs that guide the way we manage your portfolio. These principles provide a consistent framework that can be used at all stages of your investment lifecycle. Utilising the combined experience at Forest Wealth and extensive research, we have summarised our philosophy in this document.

Our Investment Principles

1. Understand the Client’s Goals

We will develop an overall financial strategy that considers your short and long-term goals, investment time horizon, and risk tolerance. By understanding your unique financial situation, we can establish investment solutions that align with your overall financial objectives. This personalised approach ensures that your investments are tailored to meet your specific needs and aspirations.

2. Investor Risk Profiles

A cornerstone of investing is establishing your investor risk profile. We do this by explaining investment concepts and risks, asking you questions, and then assessing your responses. Clients with a higher investment risk tolerance will have a greater percentage of their assets invested in growth assets, such as Australian and Global Equities. Conversely, a lower tolerance for investment risk will result in a higher proportion of less volatile asset classes such as cash and fixed income. By establishing your correct risk profile, we can ensure you maximise your investment potential with an acceptable level of risk. The following graph represents the different investor types and the relationship between risk and return.

3. Asset Class Diversification

We believe in diversifying both across and within asset classes. Asset classes we use include Australian & Global Equities, Property & Infrastructure, Alternative Investments, Bonds & Fixed Income, and Cash/Term Deposits. As market and economic conditions change over time, each asset class will respond differently. Diversifying across these asset classes may help lower your portfolio’s risk and deliver more consistent returns over time. This approach helps to mitigate the impact of market volatility and enhances the potential for long-term growth.

4. Strategic and Dynamic Asset Allocation

A key part of our portfolio construction process is to establish a long-run strategic asset allocation based on the objectives and risk levels of your portfolio. Your portfolio will be periodically rebalanced to ensure it broadly maintains the same asset class weights over time. This dynamic approach allows us to adjust your portfolio in response to changing market conditions and your evolving financial goals, ensuring that your investments remain aligned with your objectives.

5. Investment Management Styles

Forest Wealth believes that most developed markets are highly efficient and that over time it has become more difficult for active managers to outperform their respective benchmarks. Where possible, we prefer to allocate the majority of a portfolio’s holdings to Index and Smart Beta ETFs and/or managed funds. In certain markets, where mispricing is more prevalent, we may allocate holdings to active fund managers. This balanced approach leverages the strengths of both passive and active management strategies to optimise your investment outcomes.

Our Investment Committee

Forest Wealth has chosen to partner with Lonsec to provide expertise with asset consulting and portfolio construction. The Lonsec Group is a pivotal force within Australia’s financial advice and investment industry, encompassing market-leading brands such as Lonsec Research, Lonsec Investment Solutions, SuperRatings, and Implemented Portfolios. This partnership ensures that our clients benefit from cutting-edge research and robust investment strategies, enhancing the overall effectiveness of our portfolio management.

How Our Investment Philosophy Benefits You

At Forest Wealth, our investment philosophy is designed to provide a structured and disciplined approach to managing your portfolio. By adhering to our core principles and leveraging the expertise of our investment committee, we aim to deliver consistent and reliable investment performance.

Our commitment to understanding your goals, managing risk, diversifying assets, and employing strategic asset allocation ensures that your investments are well-positioned to achieve your financial objectives.