Our investment philosophy and portfolio construction process

Lonsec’s investment process combines a dynamic approach to asset allocation with active investment selection. We combine our in-depth sector research and with our portfolio construction expertise to create high-quality, multi-asset investment solutions that can be tailored to your clients’ needs.

Our investment philosophy

Lonsec’s investment research driven approach to portfolio construction
is underpinned by four key beliefs:

Dynamic approach

A dynamic approach to portfolio management to achieve investment objectives while managing downside risk.

High quality assets

Investing in high quality investments underpinned by Lonsec’s extensive research.

Risk management

A strong risk management culture supported by a rigorous governance process.


A diversified approach to portfolio construction.

Risk managed performance

Smoothing out returns by forgoing some potential upside, whilst limiting the downside, will result in superior long-term performance. Philosophically aligned to this belief, our portfolios are designed to keep pace with market returns while outperforming the market during a downturn.

Our portfolio construction process

Lonsec’s investment process combines a dynamic approach to asset allocation
with active investment selection.

Asset allocation

A key part of our portfolio construction process is to establish an asset allocation based
on the objectives set for the portfolios. Lonsec applies a dynamic approach to asset allocation designed to manage portfolio risk as well as enhance portfolio returns over the medium term. Lonsec’s dynamic asset allocation process focuses on three key factors:

Asset class valuations

Lonsec utilises a range of valuation metrics to assess whether asset classes are expensive or offer value over the long term.

An assessment of the business cycle

Lonsec analyses whether the business cycle is in an expansionary or contractionary phase by assessing a range of macro-economic indicators.

Sentiment and momentum

Lonsec observes a range of indicators to determine short term market sentiment.

Our investment committees

Lonsec believes that a strong governance framework is critical in making effective portfolio decisions. Having an investment committee process governed by an investment committee charter and comprised of experienced investment professionals with diverse areas of expertise, reflects best practice in portfolio construction decision making.

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