2 Take advantage of the expertise to be found in active fund managers where appropriate, whilst keeping costs down by also using ETFs/Index Funds and direct investment in stocks, shares and bonds where our expertise can justify it.

We believe that there is significant expertise to be found in active fund managers, but that the real the skill is to look carefully to select only those funds that can justify their management fees over and above other more economical routes to market such as ETFs and Index Funds and even direct investment in stocks’ shares and bonds.

Thus we need to work out the best route to market in each asset class. The default option for us is therefore ETFs/index funds. We then seek to find managers that can enhance investment returns over and above their management fee. We believe that fund selection is an art not a science – you are after all trying to predict the future. We do not consider that it can be done via a black box approach that is based on purely quantitative analysis. You can use a quantitative approach to do an initial screening, but after that, selection needs to be done on more qualitative measures, of which getting to know the manager, and having regular meetings is vital. The third alternative open to us is to pick stocks and bonds ourselves – but only in areas where we truly believe that we have the ability to do so.