"To the man with only a hammer, everything looks like a nail."
We find it fascinating that many investors limit themselves to only investing in Australian companies. Australia is a mere 2% of the world's markets. By limiting yourself, you are missing out on the 98%!
Visa, Mastercard, American Express, Microsoft, Berkshire Hathaway, Facebook, Pepsi, Coke, Amazon, Alphabet, Johnson and Johnson, LVMH, Safran, Unilever, Reckitt, Colgate, Intuit, Costco...... The list goes on, yet the calibre of companies in Australia simply doesn't compare.
The vast majority of the world's best companies don't reside in Australia.
For this reason, we look beyond our shores.
Valor is one of the leaders in modern portfolio construction for Australian investors, utilising advanced Separately Managed Account (SMA) technology. We are paving the way forward with one of the most tax efficient methods for managing Australian portfolios.
Buy and Hold
We look to buy and hold to reduce portfolio turnover. This creates long term tax efficiencies.
Most use managed fund structures to invest globally. There are two issues with this. First is the unrealised capital gains tax issue after a long bull market. Second is that most funds are either fully currency hedged or not at all.
Someone else's capital gains tax
If you buy into a managed fund that has significant unrealised capital gains built up, you may one day be forced to pay capital gains tax on gains that you never made. This is worse at the end of a long bull market like we are today. To avoid this, we generally invest directly in our clients names.
Dynamic Currency Protection
If you invested globally from Australia without currency protection in 2001, when the Aussie dollar was 47.7c, you may have lost money for a decade as the currency appreciated more than many unprotected portfolios.
Similarly, if you invested in a currency protected portfolio in 2011 when the Aussie dollar was $1.10, you were forced to pay for costly currency protection and missed the huge tailwind of the falls from $1.10 to 55c.
Valor strongly believes that the Aussie dollar will yoyo approximately within the 25 year range of 47.7c to $1.10. The movements within this range can create opportunities for those that are able to take advantage of them.
Valor operates the only direct global SMA investment portfolio in Australia with direct currency protection. This superior capability allows us to be truly global and have a dynamic currency protection philosophy. Dynamic means that we can protect when the Aussie dollar is lower and benefit from the tailwinds when it is higher. We can do this without having to sell whole slabs of managed funds to change our currency protection.
Very few people die of shark attacks every year compared to the billions who enter the ocean. Despite the exceptionally low probability of dying, many people are afraid of shark attacks. The reason for this is that you generally can't see what is below you when you are swimming in the ocean.
People are scared of what they can't see or don't understand.
Our structure of direct global investment, allows our portfolios to be some of the most transparent available. This protects you from being scared of what you can't see.
Our clients love the transparency, knowing that they are invested in the world's best companies.