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“Family offices do asset allocation very well and what it breaks down to is they’re long-term focused, and they don’t overcomplicate asset allocation.”
Derrington believes investors should own shares in high-quality businesses that compound wealth over the long term and seek to invest in private businesses to unlock higher returns.
These are the principles behind the success of a side project Alvia is brewing. Its Absolute Return Fund has just $20 million in FUM, but has returned 15 per cent a year net of fees since inception in 2020. This puts it in the top 2 per cent of returns for funds versus its Morningstar Australia Aggressive Target Allocation benchmark, and heavily ahead of the S&P/ASX 200’s returns, including dividends.
“In the fund, we’re prepared to be more concentrated. At the moment, we have 23 positions, and we’re not index aware at all. We tend to hedge [downside protection] via gold and treasuries, as opposed to shorting stocks,” says Derrington.