Rathbones was officially founded in 1742, although the family origins of the firm go back to the 1600s. The firm started out as a sawing business in a Liverpool timber yard. Once an established merchant, a number of the Rathbones family members devoted their passion to social justice and philanthropic movements. They campaigned in a number of revolutionary movements including backing the abolition of the slave trade and campaigning for the provision of nursing to the poor and female suffrage.
From its beginnings as a simple sawing business, Rathbones became progressively a timber merchant, a shipbuilder, a general merchant, a commodity dealer, a manager of family funds and then a wealth manager in its own right. The persistence of good traits through successive generations is as central to Rathbones’ success story as its ability to adapt to change. Built on a history of philanthropy, it is still the values of heritage, stability, stewardship and trust that inspire the company today.
Rathbones is the second largest investment provider to the top 5000 charities and the fourth largest manager of charity assets in the UK overall. We manage around £4.7bn of assets for over 1,300 UK charities. We have a specialist charity team, not a private client or institutional team which also happens to deal with charities from time to time. Each member of the team has an average of 20 years’ investment experience.
Our investment philosophy and process has evolved hugely as a result of lessons learnt from the financial crisis of 2007/2008. We believe that a long- term investment strategy incorporating an asset allocation framework is the key to providing consistent risk-adjusted returns to meet our clients’ objectives. As a result, since 2009 we have divided up the various investable asset classes into three distinct categories.
The ‘Liquidity’ portion covers the safe and secure investments such as government bonds, high quality corporate bonds and cash. These should have low levels of volatility, at least in comparison to other asset classes, and thus should be readily realisable even during periods of market stress. It is this portion of the portfolio that should match any short term requirements, including any liquidity needs. The weighting will also to a material extent reflect your risk tolerance.
The second category is termed ‘Equity Risk’. This represents investments which are highly correlated with, or sensitive to, the economic cycle and investor sentiment. Thus as the economy recovers and optimism returns these assets should perform well but, on the flip side, as economies weaken or fall into recession they may decline in value. Investments such as UK and overseas equities plus higher yielding corporate bonds are good examples of what is included in the Equity Risk category. These investments should, given their more volatile and risky nature, generate the bulk of the returns of a portfolio being invested for the long term.
The last category is ‘Diversifiers’. These should, in theory at least, be relatively uncorrelated to the economic cycle and aim to generate returns independent of economic and market conditions. This portion should thus provide further diversification to a portfolio comprised solely of equities and bonds and therefore reduce the overall risk profile of a long term portfolio. However, we realise that such investments can be difficult to identify and 2008 provided us with many illustrations of assets classes that failed to provide the expected levels of diversification. Despite this difficulty, examples of Diversifiers are infrastructure assets, property and absolute return funds.
The key to our approach is to ensure that we combine these different categories of investments (Liquidity, Equity Risk and Diversifiers) to meet your objectives. Their relative weightings will vary as different opportunities or risks arise, or if client requirements change.