The story of outcomes-based investing | Understanding and explaining the concept

Once upon a very recent time, there was an investment company that decided to completely reinvent itself to become the leaders in outcomes-based investing in South Africa. As a boutique discretionary fund manager, Amity Investment Solutions aims to assist the independent financial advisor with outcomes-based offerings, thereby ensuring a new era of financial advice.

While outcomes-based investing is by no means the brainchild of Amity, it is at the heart of what we do and our values and ideas stem from this investment philosophy.

What is outcomes-based investing?

Outcomes-based investing is an investment strategy that reduces the uncertainty of investment outcomes. Portfolios are managed to optimise the probability of consistently achieving a predetermined range of outcomes over a specified rolling investment term.

Usually, investment strategies provide a combination of assets that deliver a better risk-adjusted return in prevailing market conditions. Outcomes-based investing focuses on which combination of assets has the highest consistency of achieving a specified range of outcomes regardless of market conditions.

How is outcomes-based investing different from other investment strategies?

Traditional investment strategies look for return opportunities and risk is then often a by-product of the combination of asset classes used. Outcomes-based investment strategies focus on enhancing the consistency of a specified range of outcomes. This is achieved by actively managing the risk. The risk criteria used, incorporates behavioural biases that have proven to influence investors decisions over time. By focusing on both the consistency of the outcome as well as quantifying and actively managing risk, the probability of achieving a predetermined outcome is enhanced.


The above illustration clearly shows the difference between a very traditional investment, which most investments are, and an outcomes-based investment strategy. This also highlights that outcomes-based investing should by no means be confused with the old traditional asset-liability matching strategies or target-dated portfolios. The strategy is more refined and places a large focus on the investor and not the investment.

Outcomes-based investing is ideal where the advisor is challenged with identifying an investment that is suitable for their client’s investment goals.

As an advisor what do you look for in the investments you recommend for your clients? Does your due diligence focus on investment products that performed well compared to their peers over the last year or maybe the last few years? Do you look for funds with low cost? Or maybe you prefer funds of companies with well-known brands? In part 2 of our outcomes-based series, we'll continue the outcomes-based journey.


The Amity Advisor Experience team will assist with any queries you may have!
Go to our contact us page to find the necessary details.
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