Introducing the Optimum Index of Household Investment Propensity (HIP)

A huge responsibility rests on the shoulders of the financial services industry to provide clients with sound advice on short-term insurance and long-term investments. This task has become more daunting in the internet age, characterized by information retrieval on call. The plethora of data that is currently available is useful, but the challenge remains to distinguish between trends that are relevant and those that are either overly generic, biased towards particular asset classes or too focused on the short-term.

At the Optimum Group, an Investment Committee has been created whose members are exceptionally well-qualified to select the most valuable market research inputs from associated firms and investment data analysts. Ultimately, our decisions on portfolio composition are determined by blending the personal and lifestyle characteristics of each individual client with an appropriate selection of asset classes, be they bonds, equities, indexed funds or cash.

In principle, we believe in a long-term focus, a measure of diversification into different sectors of the economy and an element of hedging against currency risk and our investment approach continues to pay handsome dividends.

As part of the Optimum Group’s continued efforts to enhance the quality and scope of information that could have a meaningful impact on the rates of return on its investment portfolios, the Investment Committee now also considers the trends depicted by a quarterly composite index of household financial resilience. This index consists of 21 key quantifiable economic indicators that collectively serve as a barometer for the economic environment underpinning the ability of households to engage in short-term and long-term insurance activities. It has been designed by Dr. Roelof Botha, a veteran of the economics profession, who has taught at several Universities (including GIBS).

As a service to existing and prospective clients, a selection of the key indicators included in the index will be published on the Optimum Group’s website and updated every quarter.