Permanent capital means we are never forced to act and can move quickly when others can’t. In this short film, we show where that philosophy – built over multiple generations – becomes process.
Members of our leadership team explain how we approach investment risk across a portfolio spanning listed equities, private companies, credit, and real assets. The themes covered include why we think about diversification as uncorrelated returns rather than a long list of holdings, why the freedom to hold cash and wait is itself a risk control, and how discipline is applied decision by decision rather than through process alone.
Text transcript below.
Introduction: This portfolio has performed very, very well for a long time. Over the last 25 years, we've done nearly 5% above the market. But that's not really the full story. What's more important is how do we perform when markets are volatile — and when markets lose money, our portfolio tends to do better than the market.
Todd Barlow, CEO:
There are three main objectives that we have in managing the portfolio. The first two relate to performance criteria, but the third one is managing risk. And that's incredibly important for us. Most people only focus on those things that they can measure.
Our approach to risk management is not about filling buckets. We don't have a top-down approach where we allocate certain percentages to certain asset classes. It's about finding the very best opportunities from a risk-adjusted return basis, and that's a dynamic process.
Dean Price, MD, Principal Investments:
There are multiple asset classes, multiple investments, but there's only one investment team. There are no silos, and it fosters really good investment decision-making and good collaboration amongst the team. The flexibility of our mandate means that we can be more dynamic than most. If we think that credit is looking like good return for risk, then we can pivot our portfolio there and become more concentrated there. If we suddenly think that listed equities is where we want to be, then we have no impediment to positioning our portfolio in that way.
Todd Barlow, CEO:
The portfolio is constantly shifting in favour of the best assets. As we find new ideas, we find ways to fund those investments.
David Grbin, CFO:
One of the unique features of Soul Patts is that we invest our permanent capital that's been built up over generations. We make sure that we have enough cash on hand, borrowing facilities or other types of investments that we can turn into cash really quickly. Having that strength of balance sheet and liquidity enables us to respond immediately when there is a market dislocation - to take advantage of mispriced assets, or really good assets that once were too expensive but now, because markets have turned, are a real opportunity.
You are just a steward of all of the patient capital that's been built up over 120 years. That instils a real respect for the people that have come before you, but you need to leave it in a better state than you found it.
Todd Barlow, CEO:
It's one thing to have a defensive portfolio that is resilient through periods of volatility. It's another thing to be able to deploy capital into that weakness and make money when others are fearful. We can take those counter-cyclical bets and diversify the portfolio so that we can withstand any kind of shocks.
Jaki Virtue, COO:
The operations team has to have high visibility of all the investment activities the team undertakes. That's a lot. We operate across five different asset classes, and we have a range of investments that channel through each of those asset classes each and every day — including the scrutiny of different investment opportunities before we actually execute a transaction.
We keep the organisation safe, but we can move really quickly to prosecute the ideas that matter. We can do that in periods where there's extreme market volatility, and we do that because we're positioned well. We do it early, and we've got the safeguards and guardrails in place to be able to move quickly when others can't.
But one of the things that we don't compromise on is the safety of our shareholder capital. That can only be delivered to the organisation when you have the right culture in place. We make sure that our systems, processes and most importantly, people, have the courage to call things out when they don't look right.
Todd Barlow, CEO:
Everything we do comes back to the fundamental principle that we are here to generate enduring returns for shareholders. We have no mandate and captive capital. That means that we can take long-term views about how to invest. We have complete flexibility about where we invest. We are patient, and we also have a long-standing reputation and networks that give us great access to very good deal flow.
Soul Patts' investment philosophy has been built up over generations, and it's something that will not change. We will continue to make sensible, disciplined investment decisions, protect capital and manage risk on the downside.