Investment Insights: How does Brown Shipley manage an investment portfolio?

Toby Vaughn, our Chief Investment Officer, provides detailed insight on how Brown Shipley investment portfolios are managed.

How does Brown Shipley construct a portfolio?

There are a number of key components to the construction and management of the Brown Shipley investment portfolios, but before going into the detail here, it’s worth emphasising one key principle that we prioritise prior to anything else.

This priority is that each portfolio has to be managed within the clear parameters that we specify for the specific product in relation to the risk taken to generate returns. Ensuring that the product does what it says on the tin and stays within the risk boundaries we have stated is key.

Aside from this there are 3 key pillars to the management of our clients’ portfolios, and we actively manage in all these areas:

1. Asset Allocation – this is essentially the policy that drives the shape of the portfolio. It is where we decide on the allocations between markets – such as the percentage of the portfolio in equity markets, fixed income, alternatives, or cash.


2. Selection – this is essentially the process that decides how we populate the portfolio – i.e. which vehicles (be those funds or stocks) that we hold in each market.


3. Risk Management – ultimately this is the final stage of portfolio construction where we decide on the position size of all holdings in the portfolio, to ensure that the portfolio is positioned to deliver on objectives.

What are the key characteristics of a typical Brown Shipley portfolio?

There are multiple components that are specific to a brown Shipley portfolio, but to select a few I would highlight 4 key characteristics:

1. Multi Asset Exposure – by this I mean that the portfolios tend to be diversified across different asset classes – such as equities, bonds, alternatives and cash.


2. A Global Focus – to generate attractive returns over the cycle the portfolios also have material allocation to international markets, rather than just being constrained to the UK.


3. Actively Managed – we do not just create a portfolio and leave it. All the components mentioned before (from asset allocation to selection and risk management) are actively managed, and adapted for the changing investment environment we are in.


4. Highly Diversified – the portfolios tend to be diversified on multiple levels – across asset classes, with exposure diversified amongst funds and managers from across the industry, and a multitude of strategies and styles. This diversification is all to achieve attractive returns over the cycle in a smoother manner than a more concentrated approach.

Hopefully this has provided more clarity regarding how we manage our client’s portfolio. For more information on investment management click here.

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