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Wealth Manager: steady sailing with Tideway's former international yachter
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by James Phillipps on May 23, 2013 at 00:01
Experience is everything in investment and after suffering personal losses in the equity markets in 2009, Tideway Investment Partners’ James Baxter decided a new approach to portfolio management was needed.
‘I set up Tideway in 2009-10 when equity markets had just fallen by 40%,’ he says. ‘Private clients are much more sensitive to the downside but even knowing that, people still invest mainly in equities. It’s not always been like that.’
The firm’s investment process centres on what is on the face of it a very simple premise. The team only invests in things that they fully understand and that offer a surety of return.
The investment philosophy was driven by Peter Doherty, a partner in the business and long-term friend of Baxter’s. A University of Oxford engineering graduate and Goldman Sachs alumni, Doherty had originally approached Baxter as a client, but was swiftly signed up to the firm.
‘He initially gave me his Sipp to run and when I saw how he was running money I told him he should join me,’ Baxter says.
‘He has a completely different approach to running money to what I had seen before. In simple terms, he only invests in things where he understands how he will get his money back from them. He won’t invest in anything where it is a game of odds and he doesn’t know what the return will be.’
This predominantly leads Tideway to invest in fixed income, although client portfolios do have a limited amount of equity exposure in order to meet the target of delivering inflation-beating returns with low volatility that will compound over time.
Besides the stability of capital this approach delivers, it also enables Tideway to more tightly manage client expectations and crucially, limit drawdowns.
‘If you ask most wealth managers what return they’ll deliver to their clients this year they will say that based on the historic average, they will return X, but there will actually be a massive standard deviation around that,’ he says.
‘With fixed income, yes you have default and interest rate risk, but you have a maturity date and can pretty much forecast the return.’
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