Goodhart's Law
“When a measure becomes a target, it ceases to be a good measure”
This Law originates in a paper delivered by economist Charles Goodhart in 1975. Goodhart’s Law became well known in the 1980s as an explanation for why the British Government’s attempt to control inflation through the use of monetary targets failed. Historically there had been a high correlation between money supply and inflation. So Chancellor Nigel Lawson decided to publicly set targets for money supply growth in order to control inflation. But when the “measure” became a “target” the relationship broke down.
We think Goodhart’s Law is relevant. It cautions us to really think about the relationship between cause and effect, and to not just accept that what has happened before will repeat itself. It also suggests that we will only generate exceptional returns for clients if what we do is different. We need to identify opportunities that cannot easily be exploited by everyone else.
For the avoidance of doubt, Charles Goodhart and his family do not endorse or have any financial interest in Goodhart.
What makes us agile?
Our culture
Goodhart is a wholly independent partnership. We are not subject to the whims of a corporate master, which means we can think longer term than many other asset management businesses. We manage investment strategies that have very different approaches and focuses. But we operate as one team, with one agile culture and commitment to making money for clients.
Our team
Our investment team includes specialists in value, growth, quality, large caps, small caps and thematic investing globally. We actively seek colleagues with different processes and perspectives to augment the “melting pot” of investment ideas generated across the team. This is the key to our investment engine – the creativity that comes from people with very different approaches sharing ideas, free from constraints.
Our process
The process and focus of individual strategies we manage can differ markedly. But they all share a commitment to agility, meaning they all seek to embed sufficient flexibility to navigate market, business and economic cycles. And they are all focused on specific investment opportunities rather than seeking to capture general market exposures.
Our strategies
The strategies we offer are resolutely investment-driven. The structure of market indices has no relevance for any strategy we manage. Rather each of our investment strategies operates within clear proprietary frameworks that provide discipline for portfolio construction whilst seeking to benefit from the incredible diversification available within public equity markets.
1990 to 2020
the last 30 years
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✔
Inflexible
✔
Broad
✘
Flexible
✘
Focused
What is agile investing?
Flexible
Navigate cycles
and predict change
Focused
Unconstrained, specialised, resolute
Why agile investing?
The forces that shape the world are evolving
Demographics
Demographics are no longer a deflationary influence. The previously growing workforce now shrinks. Challenges are increasing, from how to fund healthcare requirements to generational wealth transfer and more.
Security
The security environment has deteriorated markedly, from cyber security to the risks of companies operating with extended supply chains to the sharp reversal in the post cold war peace dividend of the last 30+ years.
Environment
We can no longer treat the world’s natural resources as a free good to be plundered at will. While sustainability is key to our survival as a species, it isn't a positive for conventional economic growth.
Technology
We believe AI heralds a new industrial revolution but its positive impact on productivity and global economic growth will be tempered by the other three macroeconomic forces.
What are the implications?
US hegemony will wane against a backdrop of unsustainable Government debt. Broad global equity market returns for the coming decade and more are likely to disappoint. Government debt will not be a reliable diversifier within multi-asset portfolios. Private capital markets are in a bubble that will likely burst or at least suppress asset returns globally over the long term.
Many of the trends that have persisted in capital markets and the wider investment industry since the global financial crisis will unwind. Active investing will be rewarded. Shorter economic and business cycles will mean smart beta and factor ETFs will struggle. Larger caps will underperform. Capacity in active investment strategies will be lower.
The investment regime has changed. This is a wonderful opportunity for agile investors that are able to navigate investment cycles rather than rely on a rising tide. Volatility will create extraordinary opportunities for managers that are willing to focus on specific investment opportunities rather than hug market indices and fear doing something different.
Who are we?
A wholly independent global equity boutique that manages a range of global and regional equity strategies with distinctive approaches and processes, but a common commitment to what we call “agile” investing.
Global equity boutique
An agile investment approach designed to prosper in the changing world we envisage
Partners business
Supporting a select group of other boutiques with a combination of capital, commercial and operational services
Agile global investors
2020 to 2050
the next 30 years
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✘
Inflexible
✘
Broad
✔
Flexible
✔
Focused
Our Investment Strategies
We implement our
agile
approach through six complementary strategies
GLOBAL
Global Real Return
Global Equity
FLEXIBLE
REGIONAL
Global Real Return
Europe Ex UK
European Micro
A shared investment philosophy
The team are united by commonly-held investment beliefs.
Fundamental
Business analysis is invaluable and the core focus of our research process.
Long term and patient
We recognise it can take time for the thesis on a stock to be reflected in price.
Humble
We will admit freely to our mistakes, and are committed to learning from them.
Willing to predict change
We must all be bold, independent, and able to back our strongest convictions.
Respectful
Our culture of collegiate autonomy embraces diversity of opinion.
Specialist
The payoff for genuine insight can be substantial and worth effort.
Performance Highlights
Our flagship funds have consistently outperformed their benchmarks.
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
agile
1 Year Return
Fund
Benchmark
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Global Equity Boutique
1 Year Return
+22.7%
Fund
Benchmark
+22.7%
+15.9%
Past performance is not a reliable indicator of future results.