Principles we take seriously. Not ornaments we hang on the wall.
All managers have 'investment principles'. Few are able to decline a deal because it violates them. It is precisely this ability around which we have built our entire culture: a principle that can be deviated from is not a principle – it is a negotiating proposal.
The Seven Principles
Capital Preservation Before Returns
We never accept a risk of permanent loss for a marginally expected excess return.
Long Horizon
All decisions are evaluated over a 15+ year horizon.
Conservative Leverage
Conservative leverage with each acquisition.
Direct Assets
We invest in physical properties. No synthetic exposures.
Geographical Concentration
We manage what we can visit by car.
Liquidity Reserve
12–24 months of operating expenses in cash reserve.
No Conflict of Interest
No brokerage fees, no retrocessions, no product commissions.
The Principles Behind the Principles
The seven principles are not chosen at random. They have been distilled over ten years of working with this specific client group and each contains a well-documented antidote to a specific error we have observed recurring in the industry.
Capital preservation before returns counteracts the simplest error: chasing the last percentage point and accepting risks that can, in the long run, eradicate all previous work. The long horizon counteracts overactivity – the single most documented cause of wealth destruction in private wealth management. Geographical concentration counteracts the arrogance that leads otherwise serious investors to buy properties in countries whose laws and markets they never fully understand.
Every time we are close to deviating from a principle, it is recorded in writing – even if we ultimately do not. This documentation forces introspection, which is often the only difference between a good and a bad decision.
What the Principles Cost Us
These principles come at a cost. We decline clients who want exotic assets. We decline deals where the seller insists on 70% leverage. We decline financing partners who wish to structure products with retrocessions to us.
This is turnover we leave on the table week after week. It is the price of having a model that is predictable over a 30-year horizon – and it is a price we consciously pay.
"A principle that cannot cost you a deal is not a principle. It is a sentiment."
Read about capital preservation
Principle number one, reviewed in detail.