INVESTMENT Philosophy…

Foundry’s investment philosophy is built on the strength and experience of our people, and the different groups that we partner with. The directors and shareholders of Foundry have broad experience in global financial markets. Each director specialises in different sectors of the investment industry and provides Foundry with a unique set of skills and diversity of thought.

Our investment philosophy derives from the work of the famed author and Professor, Benjamin Graham, co-author of the first textbook on investment research, Security Analysis (1934) and author of The Intelligent Investor (1949).

We do not attempt to be all things to all people, but instead, pursue a value-oriented approach to investment management. We have grown Foundry by aligning ourselves to the following principles:

 Emphasis on Capital Preservation:

We expect all of our managers to focus on capital preservation, Foundry views risk not as the price volatility of an investment, but instead as the likelihood of a permanent capital loss. To mitigate this risk, the manager’s we utilise apply rigorous selection criteria and invest only when there is a significant margin of safety between the purchase price and the estimated intrinsic value of the underlying investment.

Focus on Absolute Returns:

Applying rigorous investment criteria and processes, Foundry seeks to achieve strong absolute returns over time and to outperform during weak markets.

Disciplined Long-term Perspective:

Many investment strategies are built around short-term expectations, momentum and frequent trading. Foundry believes that a longer-term view of investments leads to reduced risk and allows the positive effects of compounding to take hold.

 Minimized Taxes and Trading Costs:

High portfolio turnover often generates substantial trading costs, which can significantly erode the long-term compounding of wealth. Foundry’s targeted holding period of 5+ years helps to reduce these costs.

 Investing Alongside Clients:

Key members of the Foundry Investment team are personally invested in the same investments, on the same terms as our clients, signifying a high level of shared conviction in the investment strategy and clear alignment with client’s interests.

 Asset Allocation Process & Implementation

Foundry generates asset allocation advice exclusively for clients. Our goal is to enhance portfolio returns through the judicious use of asset classes that we believe will enhance performance while tempering portfolio volatility. Each invest decision is based on fundamental research and is influenced by the sound judgements and insights of our experienced financial professionals’.

Foundry uses Tactical Asset Allocation to add or lessen the risk by adjusting investment levels to the various sectors in response to changing economic fundamentals. The purpose is to take advantage of situations where certain asset classes are seen to be over/under- valued relative to long-term expectations.

If you would like further information on investment strategies and how they are developed, time horizons, real rates of return, risks, asset allocation decisions, strategic and tactical asset allocation and diversification, please don’t hesitate to request our 'Financial Planning Process' booklet.

Key components of our process include:

Asset Allocation – A Key Determinant of Long-Term Returns: Foundry believes that asset allocation decisions have an important on long term portfolio returns. Therefore, significant effort and intellect are devoted to the asset allocation process.     

Fundamental Theory Balanced with Quantitative Analysis: Established financial theory along with the investment acumen of experienced professions, are key inputs in the investment process. Ideas generated through this process are, where possible, tested using qualitative methods.

Return Enhancement: All asset allocation decisions are made with the focus of enhancing portfolio returns for our clients whilst minimizing portfolio risk. The impact of taxes and implementation costs are considered where appropriate.

A Unique Range of Asset Classes: Foundry monitors a unique range of asset classes for consideration in client portfolios. New asset classes and strategies are sourced through a broad network of contacts within the investment community and may be included in portfolios when viewed as financially attractive and appropriate for our clients.

Customized for Each Client: Client portfolios are customized to account for specific situations and requirements. Factors such as taxes, inflation, the need for liquidity, expected spending needs, and comfort with portfolio volatility are all considered when constructing individual client portfolios.

To gain exposure to different asset classes, Foundry utilizes a range of specialist third party funds. These funds comprise of both New Zealand funds and offshore domiciled funds, ensuring that we can tailor a portfolio that best reflects a client’s situation and circumstances.

Our selection of third-party managers is driven by our core investment philosophy and demands managers who place a similar degree of importance on protecting capital and requiring a margin of safety. A significant amount of research including third-party manager interviews and a robust due diligence process must be completed before an investment is undertaken. 



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 a 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").



While gold can be regarded as a volatile asset on its own, the Foundry Investment Committee (FIC) recognize 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 fueled 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.

• Recognize 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.