Iveagh Private Investment House, which oversees the wealth of Ireland’s Guinness family dynasty, urges investors to diversify assets widely and also retain the freedom to rapidly shift in the short run to cope with current economic uncertainty, one of its senior partners has said.

The financial pages are full of comments on a possible “double-dip recession”, fears of inflation and deflation, and, on the other hand, the still-buoyant outlook for regions such as Asia. Investors do not know which way to turn - there is no sense in trying to position for a clear market trend, Cambiz Alikhani told WealthBriefing in a recent interview.

“There are a lot of undercurrents right now that are troublesome. It does not feel as though every issue has been dealt with,” said, speaking from his firm’s offices in St James’s, central London.

“The [political and central bank] authorities have dealt with some issues by merely kicking them into the distance. For the time being, you are confronted with the fact that there will be significant market gyrations. It is a period when you need to have a very diversified portfolio. Also, you need to have a tactical overlay over that diversified portfolio,” he said.

He is, for example, a holder of gold as an insurance policy against both inflation and deflation threats – a stance that puts him in the same company as firms such as Rothschild Private Banking & Trust, for example.

His comments coincided with Iveagh’s announcement yesterday that it had made a strategic investment in Clarmond Advisors, a discretionary business created in January this year by investment industry veteran Christopher Andrew. Paul Ross, chief executive at Iveagh, joins the board of Clarmond, along with Jon Hunt, founder of Foxtons, the large UK estate agency.

A wide basket

The advice to stay widely diversified rather than plunge into a big market call sounds so self-evidently sensible that it is almost dull; but Alikhani argues that one of the strengths of Iveagh, and the portfolios that it oversees, it is straightforward and transparent approach. Alikhani, a veteran of the hard-charging investment banking world in the 1980s and 1990s, has just started giving his views on a new blog, embracing Web 2.0 technology to share his opinions.

A specialist in the fixed income and hedge fund world, Alikhani worked in investment banking between 1986 and 2002 before joining Iveagh. In 2006, as part of a structural overhaul, Iveagh moved to be entirely devoted to investment management. In September 2008, for example, it started the Iveagh Wealth Fund, a UCITS-structured vehicle that is designed to broadly mimic the asset allocation process employed by the Guinness family office portfolio.

The fund has not enjoyed a great run so far, however, although it is only two years' old. The portfolio has underperformed since launch – down by 5.8 per cent compared with the APCIMS Balanced TR measure, at 5.2 per cent – but Alikhani said the fund mainly lagged the APCIMs index in the first quarter of the year as he decided to reduce risk exposure early.

Alikhani certainly has plenty of experience of market gyrations. He worked at Morgan Stanley for 10 years; before that, he was a fixed income manager at Daiwa, the Japanese bank. He said his experience of working in the industry gave him an insight into the risks – and benefits – of the eruption of the securitisation market and associated derivatives markets of the 1990s and ‘Noughties.

It is clearly a passionate issue for Alikhani, who is concerned whether the lessons of recent years have been properly digested.

“The really interesting thing about the globalisation of capital markets, which began [in modern form] in the mid-80s, is that I felt I was looking at the evolution of products that in some cases might lead to trouble later on,” he said.  

“It was interesting to see the evolution of credit [markets] which was driven by more by the desire of banks to be in as high a margin a business as possible rather than from being driven by end-investors,” Alikhani continued.

He said Iveagh prides itself on a straightforward business proposition: no hidden fee structures, no conflicts of interest and a simple product. “We offer an asset allocation service through a unitised fund that replicates the [Guinness] family’s own asset allocation process.”

Time will clearly tell if his approach to investment pays off.