Evidence-based investing
Your money has a job. Your life is the brief.
The point of investing isn’t a number on a statement. It’s time with the people you love, choices when you want them, and the kind of sleep that comes from knowing you’ll be okay. We build your portfolio around that, using decades of research rather than forecasts.
What money is for
Nobody lies awake wanting a better Sharpe ratio. They want to know they can stop work when they choose, help the kids without worrying, travel while they still enjoy it, and leave something behind. A good portfolio is simply the engine for that life.
Built around you
Start with the life. Then build the portfolio.
Before we talk about a single investment, we talk about you. When would you like work to become optional? What does a good year look like? Who depends on you? How would you honestly feel if your investments fell by a fifth in a bad year?
Your answers set the timeframe, the income you’ll need and the level of risk you can live with. Money you need in the next few years is invested very differently from money that won’t be touched for fifteen. The portfolio follows the plan, never the other way around.
Patience is the strategy
Markets reward patience. Headlines punish it.
Over long periods, share markets have rewarded people for owning businesses and putting up with the ups and downs. The difficulty isn’t knowing that. It’s living through the downs without doing something you later regret.
Selling after the fall
Selling when the news is at its worst turns a temporary fall into a permanent loss, and often means missing the recovery.
Waiting for the all clear
There is never a bell that rings at the bottom. Recoveries have often started while the headlines were still grim.
Chasing last year’s winner
By the time an investment is in the papers, its good news is usually already in the price.
Our job in those moments is to remind you what the plan is for, and to make sure you never have to sell good investments at a bad time to pay for your life. That is why your plan keeps money you’ll need soon away from the volatile part of the portfolio.
Our investment philosophy
Six principles. Plain English.
Don’t try to outguess the market
Millions of buyers and sellers trade every day, and prices quickly reflect what is known. Trying to predict the next move is a costly game. We work with market prices, not against them.
Spread your bets widely
Owning thousands of companies across many countries means no single business, sector or economy can sink your plan. Diversification is the closest thing investing has to a free lunch.
Lean towards the dimensions of return
Research points to characteristics linked with higher expected returns over the long term. We can tilt towards them in a measured, diversified way.
Control what you can control
Costs, tax, diversification and behaviour are within your control. Market returns are not. We spend our energy where it counts.
Stay disciplined through volatility
Falls are the price of admission for long-term growth. We rebalance back to your target mix and keep you on course when markets get loud.
Keep it in your name, and clear
Your investments are held on established platforms in your name. You’ll always see what you own, why you own it and what it costs.
The research behind it
Evidence, not forecasts.
Our approach draws on the same academic research that firms like Dimensional Fund Advisors are built on. It started at the University of Chicago, where Eugene Fama showed that market prices reflect available information quickly, making it very hard for anyone to consistently outguess them. His work on asset prices was recognised with the Nobel Memorial Prize in Economic Sciences in 2013.
Fama and his colleague Kenneth French went further. Their research found that differences in long-term returns between shares could largely be explained by a few characteristics, which they and others call dimensions of expected return:
Size
Smaller companies have historically been associated with higher expected returns than larger ones, with more ups and downs along the way.
Value
Companies priced low relative to their fundamentals have historically been associated with higher expected returns than those priced high.
Profitability
Companies with higher profitability have historically been associated with higher expected returns than those with low profitability.
Dimensions of expected return are long-term tendencies, not certainties. They can underperform for many years, and nobody can tell you in advance when they will reward investors. Wealth Effect Group is independent of Dimensional Fund Advisors and is not affiliated with or endorsed by it.
What this means for you
What you can expect from us.
- A portfolio built around your life plan, your timeframe and the income you’ll need, not around a product.
- Broad diversification across asset classes, countries and thousands of companies.
- Low-cost building blocks, with every layer of cost shown to you in writing.
- No investment commissions. We’re paid by the advice fee you agree to.
- Tax considered before anything is bought or sold, coordinated with your accountant.
- Regular reviews and rebalancing, and a calm voice on the phone when markets are loud.
Questions investors ask
Frequently asked questions.
Will my portfolio beat the market?
Nobody can promise that, and you should be wary of anyone who does. Our aim is a portfolio that gives you a reasonable chance of meeting your goals at a level of risk you’re comfortable with. Past performance is not a reliable indicator of future performance.
What happens when markets fall?
We expect them to, from time to time. Your plan holds money you’ll need soon in more stable assets, so you aren’t forced to sell shares at a low point. We’ll talk you through it and rebalance where it makes sense. For retirees drawing an income, see how we plan for sequence risk.
Do you receive commissions on investments?
No. We’re paid by the advice fee you agree with us in writing. Our fees page and Financial Services Guide explain exactly how we’re paid.
Can I keep investments I already own?
Often, yes. Selling can trigger capital gains tax and other costs, so we look at what you hold and plan any transition carefully rather than starting from scratch for the sake of it.
Can my portfolio reflect my values?
Yes. We can lean towards investments that rate well against the values you care about. We’ll be upfront about the trade-offs, because narrowing the investment universe can change diversification, costs and returns, and labels like ethical or sustainable mean different things to different managers.
Does the same approach work inside super or an SMSF?
Yes. The principles are the same whether the money is in your own name, a trust, a company, super or an SMSF. The structure changes the tax and the rules, not the discipline. More on SMSF advice.
WE. Insights
Markets and economy insights.
The trust tax that lands in 2028 is bigger than the headlines suggest, and the clock is already running.
The RBA Has Lifted Interest Rates Again — What Today’s Decision Means for Australian Households, Property Investors and the Cost of Living
Middle East Conflict: What It Means for Markets, Australia, and Your Portfolio.
Before you invest
How much risk should you take?
The right mix of growth and defensive assets starts with how you really feel when markets fall. We have put together a plain-English guide to the research on investor behaviour, risk profiling and why most investors end up buying high and selling low.
Your next step
Let’s build it around your life.
Book a 45 minute strategy session. We’ll talk about what you want your money to do, look at what you hold now, and show you how an evidence-based portfolio could fit your plan.
Investing involves risk, including the possible loss of capital. Past performance is not a reliable indicator of future performance. References to academic research and to Dimensional Fund Advisors are for information only; Wealth Effect Group is not affiliated with or endorsed by Dimensional. General advice only. This page does not take into account your objectives, financial situation or needs, so consider whether it is appropriate for you and read our Financial Services Guide before acting. Wealth Effect Group (CAR 424768) and Andre Dirckze (AR 395157) are Authorised Representatives of Boston Reed Pty Ltd, ABN 89 091 004 885, AFSL 225738. Accounting and tax services are provided by Altiora Advisory, not by Wealth Effect Group. See our important information.