The Wise funds are managed using a ‘quality and value’ approach which we have developed over the last thirty years. We apply our process consistently, and it has produced attractive returns over a long period. In the short term, however, returns depend on market forces which are beyond our control.

We have learned to accept market volatility, and to understand that volatility creates the opportunities on which our future returns depend.

How the Value Style works - at a glance

We adopt the value style which is in theory, buying a stock at its lowest share price and waiting till it increases before selling. It sounds simple and surely everyone should do this but it’s a difficult approach to master and here we will give more detail on the process. We can apply this approach to nearly every asset class within our sector as we have a fully flexible approach. For this example we will refer to a directly trading equity.

The best way to explain the value style is by using a clock as shown below and breaking it up into four sectors.

12 through to 3

At 12 the stock is at its peak, much loved and heavily invested in. This is an area we stay away from and wait till the share price starts to fall.

When the price does start to drop, it falls into our investable universe and that's when the hard work begins. The portfolio managers start running their due diligence and fundamental checks and if the company meets our criteria will go into our watch list.

3 through to 6

We keep watching these stocks as they fall, providing they still meet our criteria and the fundamentals of the stock are good, we start adding them to our portfolio and set a price they believe the stock should be, known as 'fair value'. Ideally we would prefer to buy them at the bottom of the fair value range. The value style is not an exact science and often share prices can fall below fair value, especially when they are universally disliked and everyone is telling you not to hold them. This is where the team must hold their conviction and back their ideas, often adding to the position.

6 through to 9

This period is an interesting time as the stock price will show early signs of recovery and will go up and becomes a ‘hold’ position. Sometimes this is short lived and it will drop again but this is also an opportunity to add to the position. We will then evaluate the fair value price of the stock on a regular basis to ensure we don't sell to late or too soon. When the price starts to rise, it can pass through the fair value range. It then becomes a ‘momentum hold’ while the price continues to rise.

9 through to 12

This stage is where the share price has reached its fair value and it’s time to sell. It's now in the departure lounge and the proceeds will be used to start the cycle all over again.

To find out more about our process and get a more in depth understanding, please refer to our RFP's under the literature tab for each fund. The below clock shows the process



Subscribe to our newsletter

Register to receive regular market views and commentary from our investment team by email

CLOSE

Search