At Yellow Capital we believe that the sole purpose of investing is for ‘the maximum after-tax total return’. We also believe that investments should be made for a real return. Our investment philosophy is over 80 years old, and based on a value approach which was developed by Benjamin Graham in the 1930’s. Benjamin Graham was a professor at Columbia University and was tutor to the best investor of all time, Warren Buffet.
A famous investment maxim says: “If you want to have a better performance than the crowd, you must do things differently from the crowd.” – J. TEMPLETON
Yellow Capital belongs to a group of investment advisors who challenge modern day investing and the academic syllabus that is promoted by the industry. Therefore we have a contrarian view to most City managers. We treat our investment operation as a business, which means that we take a business-like approach to determining the risks rather than a theoretical-scientific approach.
Yellow Capital’s vision for investment management is to improve client lifestyles through increased prosperity and greater consistency of investment outcome. Our aim is to increase client incomes, add capital gain and to reduce liability to taxes. We seek to achieve this through a disciplined and tested investment philosophy.
Yellow Capital are long-term investors and not traders. We look to enhance our clients’ wealth in ‘real’ terms by applying the principles of value investing and behavioural finance in investing.
Our boutique-style ownership model emphasises our specialisation and focus which is underpinned by the implementation of our regimented systems and processes in all parts of our business.
Yellow Capital follows a contemporary value strategy of investing. Evidence suggests that value investing over the longer term provides a better return than growth, it also falls less in falling markets but rises slower in rising markets. It is by its nature a cautious approach and does not expose an investor to over-valued markets. We are flexible and use a combination of active and passive investment funds depending on the underlying asset class. We use a core & satellite approach to portfolio construction and the portfolio construction process is a bottom up active process with a strategic asset allocation overlay. We offer portfolios designed for income or growth and all our portfolios are designed with an underlying risk-graded structure and framework embedded within.
We prefer to rebalance twice annually or in the event of an extreme market movement, to take advantage of opportunistic rebalancing. Typically May and October are selected, but it is not an automated decision, a realistic assessment of valuation is first undertaken.
We combine internal investment research analysis with OBSR fund rating (Old Broad Street Research). We make use of a broad range of asset classes including individual securities and pure investment funds rather than multi-manager or expensive fund of funds. Yellow Capital are pioneers in the use of a holistic risk profiling and portfolio risk management process that is bespoke to our clients’ real and full situation. Our portfolios are available in tax wrappers including ISA’s, SIPPs, SPV’s and trusts both onshore and offshore. Our portfolios have a clearly defined and transparent charging structure. Please see our Retail Client Agreement.
Yellow Capital’s investment management service is offered on an unbiased and independent advisory basis or, upon request, an in-sourced discretionary service may be made available. Our investment service is delivered via independent asset management platforms both onshore & offshore.
Our investment service is lead by and subsequent to a comprehensive financial plan being completed which has clear portfolio objectives and this is what sets us apart from most wealth managers. Yellow Capital offers a premium integrated wealth management solution for HNW clients.
The first step is to perform a detailed fact-find to gather all relevant financial information regarding all your assets and liabilities. These are reviewed to determine your current financial position and the reality of your personal situation – similar to a pro-forma balance sheet, a complete view of the current situation is established to determine areas that require attention.
The next step is to complete an independent e-Risk assessment. This is an integrated and thorough risk assessment based on the ARC (Asset Risk Consultants) risk spectrum that combines a robust personal risk profile and attitude to risk assessment. Only then do we produce a comprehensive financial plan & cash flow model to determine your realistic lifestyle objectives. Our financial plans are audit driven and simulate your investment in variable scenarios and economic conditions.
Yellow Capital then constructs an investment portfolio that meets your required objectives and risk parameters. We then follow consensus guidance from the Yellow Capital Investment Committee which meets on a monthly basis to determine economic conditions and review exposure to all asset classes and various scenarios. We select securities and funds based on value criteria – we search for and invest in securities that display value indicators and follow managers that adhere to the principles of value investing. We prefer to make use of the Shiller CAPE or Hussman Peak/PE ratios to indicate the level of equity exposure we should be considering, these two indicators provide a strategic level of guidance as to where the market is in the economic cycle. Further to the above, we also make use of the gilt-equity yield ratio to determine relative value of equity vs bonds which is a traditional method for determining equity allocation based on relative value.
We make use of substantial swing factors to reduce equity risk by moving to cash or hedged strategies, therefore our portfolios are not overly constrained and we can reduce risk when equity markets and economic conditions become onerous.
The value and income of any of the securities or investments and the price of shares and the income derived from them, which are recommended by Yellow Capital, may fall as well as rise. Investors may not receive the original amount invested in return. Investors should also be aware that past performance is not a guide to future performance.
Yellow Capital Wealth Management is a trading style of Yellow Capital Investment & Financial Planning Ltd which is an appointed represented of ValidPath Limited which is authorised and regulated by the Financial Services Authority. Yellow Capital Wealth Management is a member of the Yellow Capital Group.