The Future of Investments: A Conversation with New Edge Wealth

In a recent conversation between Ben Johnson, Julie Willoughby, and Cameron Dawson, Chief Investment Officer (CIO) for New Edge Wealth, a plethora of insights were unveiled surrounding New Edge Wealth's core investment philosophy and the future landscape of investments. This invaluable discussion, packed with pearls of wisdom, shines a light on how to navigate the ever-evolving investment environment.

You can listen to this and other episodes of the Big Picture in Practice podcast by Morningstar on all major streaming platforms. You can keep up with the latest episodes by subscribing to our Big Picture in Practice Newsletter.

Apple Podcasts | Google Podcasts | Spotify | Amazon Music | Stitcher

“It really is about informing clients about what they own and why they own it.”

Cameron and New Edge Wealth gets to the heart of “why” in their investment philosophy – a lesson that all financial professionals should heed.

New Edge Wealth's investment ideology zeroes in on a disciplined and opportunistic approach, tailor-making financial strategies to meet the unique needs of each client. As Cameron articulates, "Our philosophy focuses on integrating wealth strategy and understanding the unique needs of our clients." This approach ensures that each decision, whether risk or return, is balanced and ideal for the individual investor.

“We take into account the entirety of who they are, the liquidity needs and the emotional needs of staying invested. And that leads to seeking out the best opportunities wherever they come from,” says Cameron.

One thing that Cameron stresses about investment philosophy for wealth management clients is that it’s not an amorphous bucket of people who can all adhere to one belief. The investment philosophy is really informed by the wealth strategy of any given client. And when that isn’t taken seriously, the client approach can go off the rails.

“I think that the worst thing that we can do is walk into an initial client meeting and abruptly tell them to make changes to their investments without understanding who the client is and what they need,” stresses Cameron. “And that's important for very complex clients; they shouldn't be getting everything off the shelf. Some things can be off the shelf and, sometimes it makes sense to pay up for active management. But at the same time, being able to integrate with wealth, strategy is absolutely central to what we do.”

In our current market environment, the concept of ‘active management’ has taken a front seat. Specifically, in value, international, and small-cap areas, active management is the key to adding value to client portfolios. Cameron states, "The role of active management cannot be overstated, particularly in value, international, and small-cap sectors. It's about adding that extra layer of value to our client's portfolios."

Alternatives in portfolio construction also came to the fore during the discussion. “When we think about alternatives, we're looking for places where there are still structural advantages, and that those structural advantages can create return streams that are either enhanced or differentiated enough that it is worth paying up for fees to get access to those,” notes Cameron.

Selectivity and due diligence in private markets are crucial elements to consider. In Cameron's words, "The significance of alternatives in portfolio construction is paramount. It calls for selectivity and thorough due diligence in private markets."

Another short answer? A lot. But Cameron elaborates, especially about alternatives.

“I think that there will be a change of form and function. On the form side, I think that we will continue to move to have more and more alternatives, mostly as the alternative space comes around to the idea that wealth needs different characteristics, and that a wealth client will be different than institutional mostly in the alternative space,” shares Cameron.

“And we're starting to see funds come around to that. And when I say function, I think that technology will continue to play a larger and larger role in how we build portfolios, allow for greater customization allow for greater integration into the wealth strategy, and it could look at like something like artificial intelligence.”

The rapidly progressing technology sector is triggering seismic shifts in the investment landscape. Big data and artificial intelligence are playing increasingly significant roles in portfolio construction.

The short answer? 2024 is going to look different. Cameron explains:

“When we think about our 2024 outlook, we called it ‘stranger in a strange landing.’ What we mean by a strange landing is that the data will continue to be confusing. And it's also going to continue to be misleading.”

“If you had used classic recession kinds of signals over the last couple of years, you would think that we would already be in a deep dark recession,” says Cameron. And the reality is that there's been so many distortions not just to market-based data, but economic data itself because of the unprecedented disruptions in supply and demand during the pandemic, as well as the unprecedented interventions within markets in the pandemic.”

Data could change quickly, but for now there are signs of continued resilience within the economy as well as continued resilience within earnings. For investors and their support, it means they must respect the momentum and trend but also be hyper aware of the potential for increased volatility that would come from a complacent market.

It's a time of the market that demands a great deal of discipline. It's very easy to chase the hot trend and think that there's no risks. But eventually volatility will kick up and discipline will be an investor's strongest ally.

“It's a very balanced and opportunistic approach to this market, and one where we want to continuously train clients to think about if we experience downside volatility,” says Cameron. “Let's have a plan about what we're going to do with that volatility. What would we reallocate to, what would we buy? If we have a plan in advance, we're much more likely to execute that plan rather than get scared when volatility surges.”

From this detailed discussion comes a powerful message for all investors about emphasizing vigilance and adaptability. "The ever-changing investment landscape demands us to stay vigilant and adaptable. The future belongs to those ready to embrace change and capitalize on it in a manner that serves their unique investment goals," Cameron said.

In the world of investments, the only constant is change. The insights shared by Cameron Dawson serve as a guide for embracing this change, preparing for what lies ahead, and ensuring prosperity in the existential world of investments. Stay vigilant, adaptable, and disciplined in our investment journey towards achieving our financial goals.