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Our Investment Approach

At Ellis Davies FP we adopt an evidence-based investment approach. This means the way we invest client money is rooted in rigorous research and relies on data-driven principles to guide investment decisions.


This approach is based on decades of academic research and is designed to help investors achieve their financial goals while minimising unnecessary risks.

The underlying principles within our strategy are as follows:

Principle 1: Diversification is key

Numerous studies, including the work of Nobel laureates Harry Markowitz and Eugene Fama, have shown that diversifying your investments across different asset classes (such as stocks, bonds, and property) reduces risk without necessarily sacrificing returns. Diversification can help smooth out the volatility in your portfolio. Our portfolios typically have over 10,000 individual holdings.

This evidence-based investment approach is grounded in the work of renowned researchers and Nobel laureates and is designed to provide investors with a robust framework for making informed decisions and achieving their financial objectives. Remember that while this approach is backed by research*, individual circumstances and risk tolerance should also be considered when constructing an investment strategy.


At Ellis Davies FP, we align your money with a carefully constructed financial plan. When it comes to implementing our beliefs, we outsource the portfolio construction and maintenance to Discretionary Investment Managers (DFMs). The DFMs can access share classes of funds that are not typically available to most advisers or retail investors directly. In addition, the DFM has regulatory permission to make changes within the portfolios without client consent to ensure the portfolio remains on track and within the agreed mandate. This frees up time for us to focus our efforts on financial planning.

As part of the continual learning an adaptation of our approach (principle 8) we introduced ESG (Environmental, Social and Governance factors into our portfolios in 2019. The evidence gathered suggests that incorporating this into portfolios can improve risk adjusted returns over time**. We also believe that this is also the right thing for us to do for the world at large and that there is a growing requirement to consider the behaviour and metrics of organisations from an ESG perspective.


*Berkin & Swedroe’s Your Complete Guide to Factor-Based Investing, 2016.

*Fama, E. & French, K. (2021). 3 Factors for Developed Markets.

*Size Matters, if You Control Your Junk.  Asness, Cliff S. and Frazzini, Andrea and Israel, Ronen and Moskowitz, Tobias J. and Pedersen, Lasse Heje, 2015

**Clark (2015). From the Stockholder to the Stakeholder: How Sustainability Can Drive Financial Outperformance.

*Costanza Consolandi, R. G. (2020). How Material is a Material Issue? Stock Returns and the Financial Relevance and Financial Intensity of ESG Materiality. Journal of Sustainable Finance & Investment.

**Unruh, G. K. (2016). Investing for a Sustainable Future. Investors Care More About Sustainability than Many Executives Believe. MIT Sloan Management Review.

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