Funds Management: 7IM vs. Dimensional


Term Paper (Advanced seminar), 2012

9 Pages, Grade: A


Excerpt

INVESTMENT PHILOSOPHY & INVESTMENT

7IM

The investment philosophy of Seven Investment Management Company is to provide the clients and other financial intermediaries with an investment advise which is more innovative and practical along with the management and platform facilities. Since the company in itself is solely an investment company, the objects of the organization thus solely depicts the investment philosophy which the firm follows. These goals ad aims mainly pertain to the company’s willingness to promote integrity and honesty within the company with the eventual result of having promoted a culture which helps the organization maintain this honesty and integrity with customers. The company seeks to be innovative in the funds it offers and promotes sensible and common sense when making investment decisions to the clients. The company also promotes the philosophy of providing an exceptional service and personalized attention to its clients. The fee charged by the organization helps the company achieve transparency. The company demonstrates independence in their services and products and lastly the company wants to be seen in the investment with the clients as a valuable partner (7IM, 2013).

The company also impresses upon the use of the same approach to investment by the private investors as that used by the institutional investors for the sole benefit of the clients themselves. Lastly the company’s investment philosophy also includes the sustainable growth of the company’s profits or a steady financial performance of the organization. This it aims to achieve by giving their own investment money to an investment manager who would produce a steady performance of the company without any extra effort required to be put (7IM, 2013).

DIMENSIONAL

Dimensional is an investment firm which majorly aims towards providing funds to the various clients who wish to attain funds for varying different purposes. Owing to this aim or objective of the organization, the company’s investment philosophy relate to the dynamism and complexity of the financial market. Thus it could be said that the company mainly has a consumer or client centric investment philosophy. The first investment philosophy the company serves is the purpose of achieving market equilibrium in the financial market which thus reflects the various profound investment implications that the firm wishes to achieve. This is mainly due to the dynamism, complexity of information, expectations, human behavior and vastness of the market. The company offers eth service of speculation to the investors owing to the market dynamics which lead to the price of the stocks to change rapidly and thus speculation helps forecast the prices before hand and attend to the future price issues beforehand, thus the company’s investment philosophy aims to provide them information so as to know the future prospects and thus make an intelligent investment decision (DFA Australia Limited, 2013).

Another investment philosophy which the firm has is the rewards provided to the investors owing to the risks taken by them. This philosophy helps the firm provide investors form intelligent decisions around the compensated risk factors involved in the bonds and equity markets which are the main sources that create wealth creation opportunities for the investors. The company takes into consideration three equity factors; the market, size and price. According to their investment philosophy, the return is earned by an investor on taking risk and gains cannot be accomplished without taking any chance or risk for that matter. The market factor states that stocks are riskier than bonds and thus yield a greater return than the bond. The relative performance of the stock is derived by two dimensions; small/large and value/growth. According o the economists smaller capped and value stocks yield greater return since it outperforms the market rather rationally (DFA Australia Limited, 2013).

Moreover the third element of the company’s investment philosophy is the diversification of their portfolio of services provided. The aim of the firm is to mitigate diversifiable risk which and other related risks which do not lead to an increase in the company’s investment’s returns. The avoidable risks which the firm aims to mitigate include the betting risks on companies and securities, holding too less securities, following market predictions, speculation in areas like interest rates and relying on third-party information or the rating services (DFA Australia Limited, 2013).

Another investment philosophy followed by the organization is the structured approach to the allocation of assets in the organization. This majorly involves the distribution of the assets defining each asset’s role in the company. The optimal level of asset allocation will be defined by the company’s own risk tolerance level, the company’s main goals and its life circumstances which actually impact the holdings in their portfolio of investment. Ideally the greater the number of stocks the portfolio holds, given the stocks are small caped and value stocks, the greater will be the risk, yet the greater the return (DFA Australia Limited, 2013).

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Excerpt out of 9 pages

Details

Title
Funds Management: 7IM vs. Dimensional
College
University of Cambridge
Grade
A
Author
Year
2012
Pages
9
Catalog Number
V214079
ISBN (eBook)
9783656425762
ISBN (Book)
9783656438137
File size
571 KB
Language
English
Tags
funds, management, dimensional
Quote paper
Richards Macdonald (Author), 2012, Funds Management: 7IM vs. Dimensional, Munich, GRIN Verlag, https://www.grin.com/document/214079

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