Stokes says the principles of investing in real assets have disappeared in favour of multi-strategy portfolios.
He says: “A number of investors with structured products or exchange traded funds have found to their cost that their investment has all but disappeared. Older school investors such as ourselves, who as individuals have been in the industry 30 years or more, do use new financial instruments but in a limited way as we have always felt that understanding risk and your potential downside is the best way of preserving clients’ capital.”
Stokes says this approach that has led to his firm avoiding “instruments of mass destruction” such as Barlow Clowes’ gilt plans, split-cap investment trusts, TMT stocks and hedge funds that lack transparency.
“We have a responsibility to our clients and investors and a major part of that is understanding what we are buying.”