We believe that markets generate returns, not fund managers. As a result, few active managers can sustain above benchmark returns after costs over long periods.  By adopting a buy and hold approach, the costs of investing can be significantly reduced over time and lead to better returns for investors in the long term, especially on an after-tax basis.

John C. Bogle, Founder and Former Chairman of The Vanguard Group sums up our philosophy in his Costs Matters Hypothesis.  He writes: "Investors as a group cannot outperform the market, because they are the market. And from that theory flows the reality: Investors as a group must underperform the market, because the costs of participation-largely operating expenses, advisory fees, and portfolio transaction costs-constitute a direct deduction from the market's return."

We believe indexing is the most efficient way for investment schemes (both superannuation and non-superannuation) to achieve long-term exposure to investment markets and implement their strategic asset allocation. Indexing provides broad diversification, relative predictability of outcome and a high degree of cost efficiency.

Our philosophy does not require efficient markets to work. Indeed, we believe index management can complement the distinctive investment philosophies offered by active managers. A core-satellite strategy where investors complement a central holding of index managers with active fund managers can be an effective way to improve the risk/return profile of many funds.

Our indexing approach is based on the belief that optimisation rather than full replication delivers the best risk/return results to clients. Owning a broad representative sample of the index enables us to closely track the index performance without incurring unnecessary transaction costs inherent in a fully replicated approach This approach provides a highly efficient way to manage change arising from index changes and portfolio cash flows.