Clients are provided with an individually managed portfolio of investments tailored to individual requirements, which emphasis's the preservation of capital while maximising after-tax wealth. Risk management has been at the forefront of our success.

An Investment Policy Statement (IPS) is generated to examine and determine the investment objectives and constraints of the client. Client objectives take into account client return and risk (willingness and ability) requirements while client constraints consider the issues of investment time horizons, tax considerations, liquidity needs, legal considerations and unique circumstances. Via the IPS process clients will be classified in one of three broad investment groups - Essential, Balanced or Absolute, which will determine the client asset allocation ratios i.e. holding percentages between equities and income securities/cash.

Clients’ needs generally fall within three broad categories and have an investment portfolio developed in accordance: essential portfolios, balanced portfolios and absolute portfolios.

Essential Portfolios. The objective of these portfolios is to generate income, provide exposure to growth opportunities and have a factor of capital preservation. Such clients probably live off the investment returns (e.g. allocated pension) and or the funds represent a significant percentage of a clients’ net worth and the client have little desire or opportunity to reproduce the asset base again (e.g. because retired). Essential Portfolios are made up of stable stocks, income securities, quality stocks and value stocks. Income securities make up approximately 50% of funds under advice.

Balanced Portfolios represent the greatest number of clients and cover the broadest client objectives. Here the portfolio consists of stable stocks, quality stocks, value stocks and store of value securities/income securities - either as a fixed percentage of the portfolio (usually 30%) or as a parking space while waiting for opportunities to be identified in the other sub-categories. Here the objective is to achieve capital growth and income while mindful of owning an overpriced or fully priced investment portfolio. The income generated can be reinvested or withdrawn as per the client requirements.

Absolute Portfolios are the most aggressive portfolios and consist of quality stocks, value stocks and store of value securities – only when quality and value opportunities can be identified. The objective of these portfolios is capital growth and income.

Once the portfolio type most appropriate is identified it is time to build the portfolio. The different security definitions are explained below. It is possible thatthe varying portfolios will carry the same securities, except for the number of shares. This is because we select stocks for their expected performance and we find that the same securities with different weightings are usually appropriate for many of our clients. The securities range from shares in top 50 companies down to small industrial companies and hybrid securities such as preference shares, convertible notes, income securities and fixed interest products. By varying the amounts clients’ hold in each security we can increase or decrease the level of income or capital growth and associated risk.

By dealing with a small boutique operator you do not become restricted in size or agility to any investment opportunity. Whereas most funds could not buy a sufficient amount of a mid cap or small cap stock to make any difference to their returns - we are able to do so, you can profit where they cannot.

When you know why you own a security you can know what kind of return to expect from it.

The subset categories are:

Stable stocks: are predominately large capitalised stocks (or holding companies with large capitalised stocks) bought/held with the aim to participate in the general market movement and bought at levels that represented value at the time. These stocks are not expected to have significant share price volatility.

Income securities/store of value securities: are aimed at producing income and providing the portfolio with stability. The weightings are to be kept within the guidelines established unless extremely obvious equity opportunities present themselves, of which is not the case presently. Depending on the security price paid some capital appreciation could be expected.

Quality stocks: are designated to be the engine room of the portfolio. It contains stocks with some of the best business models available on the ASX along with a purchase price that represents value at the time of purchase. Best business model is defined as 1) above average profit margin, either absolute or industry relative which usually implies a strong market position and 2) low requirement of capital when expanding sales. This results in increasing profits that are available to be paid as dividends while earnings that are still growing lead to higher share prices. Sometimes these businesses are only available at an attractive price when the business is going through a difficult spot.

Value stocks: are purchased because the price is low to the perceived value of the business or underlying assets. Once the share price moves to the perceived business or asset value they will be sold.

One of our key strengths in portfolio management is our risk management. Our understanding and commitment to the pursuit of value results in well-balanced portfolios appropriate for the market situation. We do not chase fads or become embroiled in over-heated markets because of the fear of missing a return.

As investors we are continually advised to diversify our portfolios. There are many levels of diversification available, but without doubt, the most important is diversification among asset classes such as equities, interest bearing securities, cash and property.

It is well accepted that asset classes tend not to move in the same direction at the same time.

By spreading your investment portfolio between different asset classes you can offset the effects of a poorly performing asset class with one that is performing well.  As a result, the volatility in market value experienced by a ‘combined portfolio’ is usually less than that of an individual asset class.

Please note that depending upon circumstances, investments will generate varying levels of performance over different time periods, and this performance may vary quite considerably from time to time. For this reason, the past performance of any investment should not be used as a guide to future performance.


Opening an Account

The account opening process is a simple procedure with application forms able to accommodate individual or joint accounts through to self managed superannuation funds to company vehicles.

The Portfolio Management Service uses ANZ share investingservices as the chess sponsoring broker and as the platform for transaction execution and record keeping. Once a broking account is opened in the required name or vehicle an ANZ Cash Management Trust (CMT) will also be automatically opened in the same name. This CMT will be linked to an already established account of the applicant.

Funds can either be deposited in the ANZ CMT from which investments will be drawn down.

Further there is a requirement for clients to consider our statement of advice, which is based on your circumstances. Our initial and subsequent discussions will cover many aspects of the portfolio objective and requirements.

Once the account is active the portfolio securities are selected in consultation with the client and ongoing portfolio management carried out under the clients’ ultimate direction.

The client will have access to view all account activity online on the ANZ share investing website.

Justin O'Kane (AR 223620) and O’Kane Investment Services Pty Ltd (CAR 230284, ABN 66 101 935 737) are Authorised representatives of PGW Financial Services Pty Ltd, Australian Financial Services Licence holder (AFS No. 384713 ABN 15123835441 ).