Investment Strategy
Why a total team approach underpins our TPA thinking - Angles & Perspectives Q3 2026
The CFA Institute’s research on total portfolio approach (TPA) adopters found that their biggest challenges were cultural change, team coordination and governance, rather than investment methodology. That rings true to us. To successfully implement a total portfolio approach, your philosophy, processes and, most importantly, your team have to be configured in a way that supports it. Put simply, a total portfolio approach needs a total team approach.
Scouts in search of opportunity
We sometimes compare our team dynamic to a beehive. The comparison is not about being busy (although we are!), but rather about our way of working. Each bee aims to find the best resources, and then to communicate this information back to the hive. Working collectively, the hive thrives.
Similarly, all our analysts and fund managers scour the world looking for the best risk-adjusted opportunities (across the capital structure), and share their insights with the rest of the team. The team debates the various ideas, decides which ones to exploit to our clients’ advantage, and then allocates resources to research these ideas fully. These ideas can be in a company’s shares, bonds or hybrid instruments; or a government bond (fixed or floating; nominal or inflation-linked).
Shared principles ensure alignment
To operate effectively, and ensure the success of our collective asset management ‘hive’, we align to some key principles.
One philosophy across every asset class
We follow a consistent investment philosophy across equities, fixed income and property. We like to shop in uncrowded areas of the market, where there is less competition for ideas and bargains are easier to find. These areas are often associated with fear and uncertainty, or are simply being ignored by investors. As Bank of America strategist Michael Hartnett puts it: “Sell hubris and buy humiliation.” Within these uncrowded areas we look for quality that the rest of the market has missed. Once we find interesting opportunities, we apply our 3M research process, assessing quality through the moat and the management review, and price through the margin of safety (the difference between the market price and our intrinsic value in a bear, base and bull scenario). In short, we are looking for mispriced quality.
Our long-standing investment in Star Bulk, a bulk shipping company in a deeply out-of-favour industry, is a good example. It compounded at 30% a year from the time we bought our first share in September 2016 until we exited our position in August 2026.
The same approach works well for fixed income credit securities, with the 3M research process being incorporated into the credit score we assign to each instrument.
One language for comparing ideas
We share a common language for comparing opportunities across asset classes. How does a returning bee tell the colony where the pollen is, and how good it is? Every security in our process is given a required return which reflects our assessment of the risks, and an expected return based on a range of potential outcomes rather than a single forecast. This gives a consistent view of expected risk-adjusted return, allowing us to compare a South African bank share with a Brazilian government bond.
One deeply integrated team
We run one, globally integrated process using a single, unified team. Our team has numbered between 18 and 20 investment professionals for several years – this is large enough to cover a broad opportunity set, yet small enough for ideas to travel quickly through the team. Our people are generalists who look across capital structures, geographies and sectors, supported by deeply embedded equity and fixed income credit skills and a broad appreciation of the macro environment.
Crucially, the team members research every asset in our portfolios themselves. Every equity, preference share, credit instrument, property share and bond – local or global – have been identified and researched in-house, and every holding in every portfolio has been specifically chosen by the fund manager. We have modelled each asset and understand its sensitivities, including both macro environment and company-specific factors. This enables us to combine assets confidently from the bottom up, understanding how they are likely to behave – both in the environments where we expect them to do well, and in more challenging environments.
Where the team sits matters too. In our open plan Cape Town office, nobody has a private office, and fixed income, equity and property specialists, fund managers and analysts all sit together. This means debate and discussion happen frequently and naturally.
Team decisions: one member, one vote
Once an analyst has researched an idea, they present it to the relevant investment committee: equity, credit or fixed income. We do not separate local and global research or investment committees. There is one committee for each asset class, whether the opportunity is in Johannesburg, New York or São Paulo. The committees are also deeply integrated with each other: around 70% of the members of our fixed income and equity investment committees are the same people. The credit analyst who understands a the company's balance sheet extremely well is in the room when its shares are debated (and vice versa), making it natural to ask whether the company’s equity or the debt offers the better risk-adjusted return.
Debating ideas is probably the most significant way we tilt the odds towards good decisions. Discussion is rigorous and focused on the facts. When an argument rests on a narrative rather than evidence, it is identified as such. At the end of the debate, every member of the committee votes and every vote is recorded. While everyone votes, an experienced group of 5 to 7 individuals on each investment committee are designated as voting members, and the investment committee decision is based on the majority view of this group. The CIO does not have a double vote or a veto. It is one voting member, one vote, and if the vote is tied, we follow the analyst’s recommendation. The ideas that make the grade are added to our buylists (for equities, credit, fixed income and property – both local and global).
We firmly believe that, over time, this kind of team-based decision-making leads to better outcomes than any individual on their own could achieve. Over short periods, a single individual might have done better, but over the longer term, the team’s decisions have consistently proven more reliable.
Discretion with accountability
Fund managers shop from the buylists relevant to their mandates. This is where the competition for capital at the heart of our total portfolio approach becomes real. Each fund manager has full discretion in terms of which securities to hold and how large each position should be, guided by the fund’s return and risk objective (which generally is focused more on limiting drawdowns, rather than constraining volatility).
That discretion comes with direct accountability. There is no committee to hide behind and no asset class sleeve to blame. We think this is the optimal blend of team-based decision-making and individual responsibility: a buylist agreed by the team, but individual responsibility for the implementation into a portfolio. Fund managers are also responsible for highlighting any portfolio-specific needs the buylists aren’t providing, thereby driving further targeted idea generation. This approach also streamlines decision-making. This has proved particularly valuable since 2020, with historical correlations frequently being poor guides of actual correlations and rapidly changing conditions requiring fast decision-making.
The wisdom of crowds, applied to portfolios
Investment committee debates centre on the individual asset: is it a good business or instrument, does it meet our 3M criteria, and would it be a good addition to our portfolios? Every month, our Portfolio Review Group (PRG) meets to examine our portfolios’ positioning and risks. This is an opportunity for fund managers to have other experienced team members look deeply into their funds, and to draw on the wisdom of the wider group.
Fund managers are encouraged to send specific questions relating to their funds to the broader group before a PRG meeting. “I’m grappling with this specific challenge. What does the group think, and what are possible solutions?” Stress tests, scenario analysis and factor analysis show how each portfolio is likely to behave in different environments, on both an absolute and a relative basis. If there is a meaningful probability that a portfolio would disappoint clients in a particular scenario, we look at how to take that disappointing outcome off the table (or reduce it), even if it means giving up some return. Each quarter, Head of Research Kevin Cousins presents on the global macro environment, inter alia taking the team through the global growth and inflation outlook, which helps inform the scenarios we look at and the probabilities we assign to various outcomes. The PRG does not forecast, and it does not override the fund manager, but it can (and does) challenge a portfolio’s positioning and encourage further work or adjustments if required.
Culture: low ego, high trust
Our process would not work without the right culture. Investment professionals have to watch their best ideas compete alongside those of their colleagues. It requires an environment in which the strength of an argument counts for more than the seniority of the person making it.
In practice, this shows up in three ways. The first is intellectual honesty: being willing to say “I was wrong” and to change one’s mind when the facts change. The second is constructive challenge: debate is about the idea, not the individual. The third is shared ownership. A fixed income analyst who argues that a company’s shares offer better value than its bonds is doing exactly what we want. Australia’s Future Fund made the point that the TPA model is working when the head of one asset class argues for what the total portfolio needs.
Opting for a team approach means we have to engage with each other from a position of respect, keep egos low, and understand how our colleagues make decisions, including the strengths and blind spots of each approach. Cultural fit therefore matters as much to us as technical skill, and we employ people with a high degree of self-awareness.
We often use the analogy of a cycling peloton. Riding together, a team can go faster and more safely than any rider on their own. It is also simply more enjoyable than riding alone, and that matters more than it might seem. An environment where people enjoy their work and are happy to help each other is one where smart people want to stay and build a long-term career. That longevity is a real benefit to our clients.
Deep muscle memory
We have run our integrated global process since 2008. Senior team retention has been strong. The average tenure at PSG Asset Management of team members with more than 10 years of investment experience is 13 years, and more than 10 members of the team started their investment careers with us. Culture is hard to build and easy to lose, and this continuity is one of the reasons we have been able to sustain our culture as the business has grown.
Ultimately, the proof of the pudding is in the eating. We pride ourselves on our long-term track record across asset classes, which shows that we continue to deliver on our clients’ objectives even as market conditions change. We believe this would not be possible without the grounding provided by our philosophy and process, our team-based decision-making and, above all, the people who make it work.
The trade-offs
There are always trade-offs, and we prefer to be open about them. An approach built on generalists, collaboration and individual discretion depends on getting the people and culture right, and that takes deliberate effort to protect as a business grows. Our portfolios can also look very different from those of peers and the index, resulting in differentiated performance over shorter periods. Furthermore, a fully integrated fund does not always fit neatly into a building block framework.
TPA aligns with how we have approached portfolio construction for almost two decades
The CFA Institute describes TPA as an integrated investment philosophy and decision-making framework. For us, it describes how we have worked for many years: one philosophy across every asset class, a common language for comparing ideas, team decisions on what makes the buylists, fund managers with real discretion and accountability, and peer review that challenges without diluting conviction.
Above all, TPA relies on people who care more about the outcome for our clients than about who gets the credit. That, more than any framework, is what allows us to build one portfolio from our best ideas, with every holding earning its place because of what it contributes to our clients’ long-term goals.
Reference:
The Total Portfolio Approach (TPA): A Practical Guide for Navigating the Transition to TPA, Roger Urwin, FSIP, and Genevieve Hayman, PhD, CFA Institute, July 2026
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