Our Investment Approach
"Investing shouldn’t be a goal of itself, but a means to achieve your objectives. Our role as a Wealth Manager is to identify those objectives, and to construct and manage portfolios to achieve them, allowing you to sleep sound at night. This page explains our investment philosophy, principles and methodology. It should enable you to decide whether froots is a match for you."
David Mayer-Heinisch - CEO
Investment Philosophy
Our investment philosophy is built on four foundational pillars which are at the bases of any investment decision.
Value-Driven
At the core of froots’ investment philosophy is a commitment to value. We believe that value is the most important predictor of future returns, ensuring your investments are based on solid foundations rather than speculation.
Systematic
Our approach is systematic and disciplined, ensuring every decision is repeatable and methodical. This allows us to act consistently and counter-cyclically across varying market conditions, while continually improving our methodologies to refine decision-making.
Personalized
By understanding your specific situation, goals, investment horizon and risk tolerance, we tailor investment strategies to align with your objectives. This personalized approach allows us to manage risk effectively and ensure alignment with your needs.
Passive/Active
We combine the best of passive and active investing, leveraging the advantages of ETFs for low costs and broad market exposure, while also incorporating active management when opportunities arise. This balanced approach aims for stable, long-term growth with reduced volatility compared to fully passive market exposure.
Investment Methodology
We build our investment portfolios using a consistent four-step process that ensures each portfolio is well-diversified, cost-effective, and customized to meet our clients' needs.
1. Definition of Investment Universe
First we look at the historical correlation between asset classes. This reveals which asset classes perform well together under various market conditions. By integrating this data with the client's objective, risk profile and time horizon, each portfolio is tailored with a specific mix of asset classes that dynamically adjusts over time.
2. Valuation of Asset Classes
Then we look at relative valuation of the selected asset classes. Because emotional biases cause price deviations, froots uses a countercyclical approach to adjust exposure. We increase exposure to more attractive asset classes and reduce it when they become less appealing.
3. Valuation Within Asset Classes
Thereafter, we assess the attractiveness of regions and sectors within the equity stake. Based on relative and absolute value, weight adjustments are applied. Currently Emerging Markets and small-cap stocks ar overweighted, while the USA and its mega-companies have a clear underweight.
4. Independent Product Selection
Finally, we independently select the best possible financial products to meet the objectives of the client. We consider all financial product around the world and consider factors like cost, liquidity, tracking error, synthetic replication risk, and diversification to optimize risk-adjusted returns.
The Importance of Calibrating to Your Investment Cycle
Risk and volatility are not the same. In a well-diversified portfolio, volatility only becomes a risk as the investment cycle shortens. Therefore, we always consider the length of the investment cycle—initially accepting volatility when beneficial, and gradually phasing it out over time as it becomes a risk.
This is how our portfolios developed
Despite turbulent times, froots has managed to achieve solid returns.
*We have been investing according to our investment approach since September 2019, performance 2024 until end Q2.
Core Principles, a Strong Foundation for Success.
Full Independence
We would never buy our own products for our clients, or accept kickbacks from product providers. This allows us to act in their best interest at all times, without ever creating any conflicts of interest.
Skin in the game
Our founders and investment team invest most of their own funds alongside our clients, ensuring full alignment and total commitment to achieving the best possible outcomes.
Tailored solutions
Only after a mutual understanding about the client’s objectives is reached, a solid portfolio can be constructed. Therefore open and honest communication is a crucial element to the success of our partnership.
Attractive pricing
Technological efficiency allows our talent to focus on client contact and investment research. This enables tailored solutions with great service at a much lower price, and to a much broader audience.