The investment decisions that matter most may not be the investments

I spent a few days in Sydney recently attending the Mercer Global Investment Forum Pacific.

I went expecting to come back with views on markets, managers and investment opportunities – and I did. But on the flight home, I found myself thinking less about specific investments and more about three bigger questions.

1. Are we building a portfolio, or collecting investments?

One comment from Sydney really stuck with me: Good investment selection cannot rescue poor portfolio construction.

When an investment opportunity comes along, the natural question is: is this a good investment? But, for a long-term investor, the more important question should be: does this make the whole portfolio better?

That changes the conversation. Before choosing investments, we need to be clear about the role they play, how they fit together, how much illiquidity we are prepared to accept and whether we have the capability to oversee what we are building. The lesson was simple: strategy and portfolio construction need to drive investment decisions, not the other way around.

2. Do we really know what risks we own?

The second thing that challenged my thinking was diversification.

Portfolios are often described using labels: equities, property, private credit, infrastructure, private equity. On paper, that can look diversified. But underneath, the picture can be different. You might own property directly in one part of the portfolio and lend against property somewhere else. Different labels, but potentially the same underlying economic risk.

The same applies to global equities. A portfolio can look geographically diversified while a relatively small number of large technology companies have a significant influence on its performance. It made me think we need to spend less time asking: How diversified are our asset classes? And more time asking: What risks do we actually own?

3. Who do we need around the table?

The third idea was around advice.

The investment industry is changing. Large investment firms are becoming more integrated, while specialist managers are succeeding by being genuinely good at something difficult to replicate.

We talk about wanting independent advice – and I agree – but independent from what? Products, manager relationships, distribution, platforms, commercial incentives? Independence matters, but nowadays it is not enough.

There is also the growing use of alliances between asset owners and investment organisations, with opportunities to share expertise, scale and access, rather than every organisation trying to build every capability itself. Independence should not stop asset owners from collaborating where doing so genuinely improves outcomes.

My thoughts are that the days of receiving passive advice are over. We need advisers who see what we do not, challenge our assumptions and strengthen our decision-making.

Playing the long game

At Rātā Foundation, we take an intergenerational approach to investment, seeking sustainable financial returns while considering the wellbeing of people and the planet.

Sydney reinforced for me that success is less about predicting the next big investment theme and more about being very intentional in our approach:

• Build the portfolio deliberately

• Know what risks we actually own

• Choose advisory partners who add capability

• Collaborate where it creates genuine value

As stewards of an intergenerational fund, we take our responsibility very seriously. Our role is to protect and grow our pūtea / fund to ensure Rātā is here for the long haul – supporting communities today while protecting the resilience needed for tomorrow.