«This, Ladies and Gentlemen, is what Mister Andy Häberli is looking at in Profond’s portfolio. Cash return on invested capital and of course he is very happy to harvest in addition price appreciation on individual investments, but it is the cashflow that makes the difference. This complex and large multi-billion Swiss Francs portfolio, managing pensions of 40’000 policy holders, is successfully run over decades including during difficult times like the financial crisis.»

Autor:  Stefan Markus Kremeth, Incrementum AG

«Dear Ladies and Gentlemen

Last week we had the chance to interview Andy Häberli, Profond’s CIO. When looking at Profond’s asset allocation one immediately notices that over 50% of all assets are invested in equities and another 30+% is in real estate. Profond invests mainly in real assets.

Now, Ladies and Gentlemen, there is a good reason for this.

At Incrementum we are also very much in favour of real assets, equities and real estate belong into this group. We furthermore like to approach financial markets with a toolbox containing various investment tools. According to investor’s needs and risk appetite we may offer individual investment solutions. The toolbox approach can be somehow compared to a medical doctor offering various medicines according to patient’s needs. Just imagine a doctor only offering one pill to cure everybody for every disease at all times. This probably would not be a very successful strategy. Same is true for approaching financial markets.

Since we cannot foresee the future and therefore cannot know where financial markets are heading, we have to develop and sometimes adapt a strategy that makes sense even during markets turmoil. A portfolio delivering regular cashflows, even if the market price of the portfolio goes up and down, is already a solid achievement. I am a firm believer of the value of positive cashflows, in fact I think cashflows are never out of fashion. If for example, you are able to generate a positive cashflow of around 4.5% p.a. over 10 years stemming from your portfolio, you have effectively built up some sort of financial safety cushion of 45% without even taking the effect of compounding into consideration.

You will still suffer and go through all the negative feelings during any potential markets crash but the great thing is that your portfolio will continue delivering cashflows regardless of the market prices of the individual holdings in your portfolio.

This, Ladies and Gentlemen, is what Mister Andy Häberli is looking at in Profond’s portfolio. Cash return on invested capital and of course he is very happy to harvest in addition price appreciation on individual investments, but it is the cashflow that makes the difference. This complex and large multi-billion Swiss Francs portfolio, managing pensions of 40’000 policy holders, is successfully run over decades including during difficult times like the financial crisis. Obviously the portfolio was hit during the financial crisis but not only did it recover but it recovered very well and exceeded its initial value by far while distributing above average payouts. This approach of seeking positive cashflows is what we are doing for years for our private clients at Incrementum, as well.»

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