The MWIC have a rigorous evidence-based approach to portfolio design.
MWIC provides research and recommendations to Consilium for the construction of the six Māpua Wealth portfolios offered through Synergy. MWIC uses a core-satellite approach to portfolio construction. The MWIC favours, in general, well diversified low-cost managed investment funds for core exposure in the portfolios. For the satellite exposures, the MWIC recommends active managers who are not tightly constrained by market indexes and have the potential to add value net of costs.
The Māpua Wealth portfolios also try to capture 'value' factors and tilt towards small companies. Māpua Wealth has a comprehensive qualitative and quantitative due diligence process for fund selection. Funds must meet a range of criteria in order to be considered for inclusion in the Māpua Wealth portfolios
The MWIC believes good governance and processes are integral investment outcomes. The MWIC’s main working principles relevant to the model portfolio design includes:
- Asset allocation is more important than manager or security selection for risk and return outcomes. The Māpua Wealth portfolios cover a range of risk profiles to suit investors with different time horizons and risk tolerances.
- Diversifying improves the risk and return trade-off. The Māpua Wealth portfolios are well diversified across asset classes, securities, and risk factors.
- Some markets are inefficient. Low cost passive funds play a role in the Māpua Wealth portfolios, but the MWIC also believes skilled managers can earn excess returns in some areas. Market efficiency and evidence of manager value-added are part of the portfolio design process.
- Responsible investing. The MWIC believe responsible investors who manage environmental, social, governance and cultural (ESGC) factors do better over the long term. ESGC is considered as part of the manager selection and monitoring process.
