Foundry Asset Management Limited is a New Zealand-owned investment and funds management company. Specialising in the management of investment portfolios for investors, who are seeking absolute or positive returns for their investments over time.
Foundry’s primary objective on behalf of clients is “preservation of capital”. With this focus we seek to deliver our investors both sustainable and attractive long term returns.
Foundry aims to articulate and deliver a clear and concise investment strategy based around several simple concepts:
● Approach all investments with an innate sense of caution, and focus on the underlying “margin of safety”;
● Security in the ownership of the underlying investment is equally paramount.
Foundry, utilising its extensive global contacts and research capabilities, takes these simple concepts and applies them to provide clients access to leading global investment specialists, that in many cases have never been available to New Zealand investors before, culminating in portfolios that are truly world class and at the same time, tax and cost effective.
Furthermore unlike many investment managers, Foundry believes, each of the advisers and principals, are obligated to invest alongside clients on exactly the same terms, conditions, and fees, using the same investment specialists. Foundry also favours those global investment specialists who have invested a substantial portion of their own personal wealth in their Fund's alongside their investors.
This we believe ensures a true alignment of financial interests between investors and advisers.
Wealth management is a journey requiring different decisions at every stop.
At Foundry we plot that journey with you, working through the best outcomes for you without taking excessive risk.
We will guide you through every step, helping you to:
Budget, reduce expenditure
Your journey starts with a budget that plots your income and your expenditure and shows you what is possible.
We divide your spending between that which is for survival, that which is for comfort and that which is for luxury. We will help move your focus from luxuries to the other areas, starting with the repayment of debt.
Set Realistic Goals
When do you want to retire, and what kind of retirement do you want?
What are your short and medium term goals that come before retirement?
How much do we need to accumulate to fulfill your goals?
With the endpoint in sight, we will do a written plan for achieving your goals.
Shorten Mortgage Repayment
Speeding up mortgage repayments saves a lot of interest cost. We will show you how to do that by revisiting the budget.
Some people feel locked out of the property market, but we can use our expertise and contacts to overcome that problem and find you a mortgage on a minimum deposit. Just talk to us to find out what is possible.
Use KiwiSaver To Your Advantage
Not all KiwiSaver schemes are created equal. And we will steer you to the best providers in this crowded field. The aim here is to use the subsidies that come with this form of saving to your full advantage.
Selection of a KiwiSaver provider is very important and the factors we look into include: What type of fund do you need to be in given your age, risk personality and goals?
Plan For Your Retirement
The earlier you start the better the outcome. At Foundry we will develop the plan to suit your needs, while managing your portfolio through the various stages of the economic cycle.
We are actively engaged in keeping you on track, with regular meetings and discussions with you to discuss where we are and if any changes are needed.
Develop an Investment Plan
Central to wealth accumulation is an investment plan that sees your wealth growing ahead of the economy while not taking undue risks with your money.
Traditional investment approaches according to modern portfolio theory attempt to make portfolios "robust" by mixing together assumingly negatively correlated assets. By doing so, these approaches assume that the asset class returns of the past will be repeated ad infinitum into the future. In the case of the main diversifier, i.e. "low-risk" bonds, this is simply impossible going forward, as yields of "low-risk" bonds are at all-time lows and therefore bond prices at all-time highs.
This means that the typical "balanced" approach to investing will confront the big majority of investors with quite unexpected returns in the future. The bond asset class will most likely fail to provide the required "automatic" diversification benefits as its prices now have reached a natural upside limit. Also, the financial crisis has shown that supposedly low-risk assets (even with excellent ratings) can deteriorate into junk within a few months once a panic takes grip of the investor herd.
Therefore, the key criteria to judge the risk of both, investment positions as well as fund managers, are not only volatility and returns from the past, but an in-depth and ongoing analysis of existing market trends, market vulnerabilities and the dynamically changing future market risk, which results from the effects of herding of the market participants (e.g. formation of "bubbles"). Foundry Gold Strategy While gold can be regarded as a volatile asset on its own, the Foundry Investment Committee (FIC) recognise its unique non-correlation attributes and see the added potential for it to lower the overall risk of a traditional investment portfolio (shares, bonds, property and cash). FIC;
•Believes an allocation to gold is prudent as major central banks implement increasingly unorthodox monetary policies. Since the GFC in 2008 central bank interventions have fuelled global asset prices by forcing interest rates to zero and negative, while suspending ‘free markets’ in an attempt to create growth. Despite this stimulus, growth is stalling.
•Recognise and respect the powerful macro trends developing in China and the Silk Road economies that support significant physical gold accumulation by their respective central banks and citizens. These strategies underpin the physical demand for gold from mines, as opposed to leveraged derivative gold proxies manufactured by banks, that has negatively influenced the gold price discovery process in recent years. Structural change driven by China and the growing influence of the Shanghai Gold Exchange is coming and should make its presence felt in a positive manner over the coming years.
Catalyst for developing the Foundry Gold Strategies FIC believes the performance of gold during the first half of 2016 provides confirmation of the start of the next phase of the gold bull market. Foundry Gold Strategies now offers Foundry clients the opportunity to tactically shift from gold bullion to growth opportunities within the gold sector in a lower risk way. An allocation towards silver and a diversified portfolio of global miners, not only lowers the risk of individual miner stock selection, but should raise returns in what is considered to be a specialist asset class. Leading indicators supportive of the FIC tactical allocation is;
•The significant outperformance of gold miners relative to gold bullion;
•The outperformance of silver relative to gold;
•Increasingly unorthodox central bank monetary policies in an attempt to lift economic growth; the shift from zero interest rate policies (ZIRP) to negative interest rates (NIRP);
•The beginning of an un-wind of global carry trades (in particular the Yen/USD) used by banks and hedge funds to fuel investment strategies since 2012. This could have significant negative implications for traditional assets buoyed by cheap money, because it results in an un-wind of the leverage in the credit markets.
We make the assumption that we are in the initial stages of a positive gold cycle. For this reason, the FIC will initially offer its Gold Strategy with exposure to listed miners, rather than bullion.
The Gold Strategy will have exposure to producing miners (those with cash flows) and emerging producers (those with little or no cash flow). This provides diversity and lowers the risk of exposure to one or two specific miners. It must be noted that emerging miners with no cash flow are higher risk and may underperform producers when gold is weak.
During the early stage of any cycle it is prudent to gain exposure to the best quality emerging global miners. While higher risk these miners should offer investors greater leverage to the most powerful gold cycle gains as their projects transition from development to producer status. A selection of emerging miners when positioned within a wider portfolio of producing miners should provide leverage at a lower risk. The strategy is high risk and volatile.
At Foundry, we employ a buy and hold investment strategy. Initially we have selected 12 global miners offering exposure to producing miners with large precious metals reserves, emerging producers and royalty plays. We expect that as the gold cycle matures, our asset allocation and stock selection will tilt more towards producing miners and bullion to lower the risk, over time.
When reviewing our stock selection, we have focussed on finding miners that have the vast majority of their mines in a jurisdiction that has very strong property rights, such as Australia, Canada and the United States. Those countries that have lesser properties rights, could see confiscation of mines by the underlying state, politely explaining “it is in the best interests of the nation to nationalise this mine”
In Search of Absolute Returns
We at Foundry do not believe that it is possible in the current market environment to create a robust portfolio from stocks and bonds just by relying on their historical negative correlation. We also do not believe that one can simply trust in the past risk-return patterns. Of course, if a manager has withstood a multitude of larger and smaller crisis events in the past, especially under varying market circumstances, this might be a first hint at robustness, but our analysis goes deeper.
In the case of strategy and manager selection, it is key to assess whether a manager's past success has been due to luck or whether there is a robustness in his talent, general approach and investment process that could withstand other, future shocks with a high probability.
Funds selection is absolutely vital, and this is an area of strength for Foundry. Foundry selects international and local funds based on extensive interviews with the principals, back testing of data and rigorous scrutiny of their investment strategy.
The chosen funds have a track record of outperforming under all conditions. These are selected for their talented managers, who have a big part of their own wealth invested in the fund. They are looking after their own portfolio while they look after yours.
Research has shown that these owner-operated funds consistently outperform the returns generated by the wider managed funds industry.
Foundry has the expertise to build from these a mix of assets that reduces risk for you while delivering on your financial goals.
Our Investment Philosophy - Absolute Return Investing
Traditional investment portfolios seek returns by investing in asset classes such as equities, fixed income or real estate, or combinations of these. While these asset classes have generally produced positive returns over the long term, short-term performance can be volatile, giving investors a worrisome and uncertain investment journey.
By contrast, absolute return portfolios seek to make positive returns irrespective of the market conditions. This helps to smooth investment returns, while also improving the portfolio’s return potential. To make this possible, absolute return portfolios typically invest across a wide range of asset classes and geographies in order to spread portfolio risk.
Foundry prefers offers to use predominately absolute return managers in client portfolios, all of which follow our multi-asset investment process with similar investment philosophy. Each underlying manager will have a different investment universe and distinct performance .
While absolute-return strategies admittedly tend to temporarily underperform in strong bull markets, their management of downside risk enables constant, steady returns over the long run and therefore assist clients in their financial objectives by constantly producing positive compound returns, without the volatility associated in traditional portfolios.
We divide the portfolio into four primary asset classes: equities, fixed income, alternatives, and cash.
Equities (shares) are your growth engine, linked as they are to the growth of the economy, fixed income provide stable income and diversification, cash is your emergency backstop and gives flexibility, while alternatives include other assets that can play a part in keeping you safe, and including gold and property.
We move funds between these four categories depending on who you are and what type of market we are facing.
Who you are and where you are going forms the basis of the portfolio we will build for you.
There are three broad categories of Foundry portfolios: Cautious, Blend and Growth. Each is designed for a different type of client with different risk profiles.
Aggressive portfolios have a larger component of shares, and smallest amount of bonds, while conservative has the smallest component of shares and largest bonds.
We design a portfolio for you that properly reflect your risk personality and your goals, while placing you in the best position possible for the economic conditions ahead.
The Foundry Performance Graph: