Quality and Consistency

12 March 2026

This article is the third in a short series from James Richards, Investment Director at Walker Crips Investment Management, sharing his investment philosophy and the principles that underpin how he manages client portfolios. In these pieces, James explores some commonly held beliefs about investing and explains why long-term outcomes often depend less on fashionable ideas and more on disciplined investment thinking and practical financial planning.

A key tenet of our approach is to aim for consistency of returns over time. We believe timing market calls repeatedly is at best, lucky and at worst, impossible. As such, we much prefer to look for investments and fund managers that align with our definition of quality as we believe that is the best way to survive and thrive over the long term.

Why do we prefer this quality focus? Well, it is through the effect of compounding – allowable by being patient investors – that we believe produces both consistent and superior results. I might be able to throw a lucky treble 20 on a dart board, but I will also get a 1 and probably miss the board with any 3 throws at the oche. In comparison, a professional will regularly get 3 treble 20s (180) – a consistent and superior return.

Turning to an investment example: If Investment A returns 70% in its first year and then remained flat (zero return) for the next 4 years, it would have returned 70% over 5 years. That is a reasonable return for those who timed their investment on day one and held for the 5-years (and even better if they decided to sell after year 1!), but a terrible investment for someone who saw the great return in year one and bought in year 2 – they had a 4-year holding period with 0% growth.

In contrast, if Investment B returned 12% every year for 5 years, not only would it have a higher return (76%) over the same 5-year period, but it would have been an equally good investment (on an annualised basis) for someone buying in year 2 or indeed year 3 or 4 and holding until the end of year 5. This example is depicted in Table 1 below.

Table 1: Consistency over gangbuster returns



Clearly this is an extreme example, but the point is that it is not about timing, rather time in the market that we prefer. Quality companies will rarely make huge annual returns like those seen with Investment A above, because they are doing what they have done for years, often dominating a niche market, making marginal gains to improve, building protection in the good times to prepare for the unavoidable, exogenous falls (such as Covid-19) in the bad times.

An example of this is Booking (Nasdaq: BKNG), a leading online travel agency, which had reserves on its balance sheet that allowed it to continue to operate without revenue during the Covid-19 period, and so whilst it was not immune from the market volatility, it was able to continue operating as a profitable business, which allowed its share price to recover relatively quickly and is now up over 180% since the start of 2020.

If we think conversely of EasyJet (LSE: EZJ), there was a 6-month period between October 2020 and April 2021 that saw its share price rise over 100%, however it has also had two falls of more than 50% since the start of 2020 and is still trading at a third of the value of its share price peak in 2015. Two companies in similar industries; one more resilient to shocks with fundamental profitability underpinning it, the other more cyclical, heavily affected by exogenous oil prices – we prefer the former.

As shown in Chart 1 below, Findlay Park American, an active fund manager that aims to buy and hold around 50 US-based companies at any one time, has returned between 9-17% on an annualised basis over rolling 10-year periods since its inception in 1998. Over that same time period, the S&P 500 (a US equity index tracker) has had periods where it has done better than this, but it has also had 10-year periods with negative returns(!). If one is monitoring this and believes they can time the market then they may have done quite well going in and out of the tracker, but if you had bought £10,000 of Findlay Park American Class 1 at inception and locked it away in a box for the past 27 years (March 1998 to September 2025), with all the income reinvested into the fund, that investment would now be worth £286,000. The same investment in the S&P 500 would be worth £127,600 – a still useful figure, but less than half the return.

Chart 1: Proven long-term consistency of returns



Source: Morningstar Direct, Walker Crips. Data to 30/09/2025

The key for us here is the consistency of returns – there have been multiple periods when the index has outperformed the active fund manager, but it comes back to what type of investment one is looking for. Findlay Park American’s worst 10-year period was 8.7% annualised, which is a total return of 130%. In contrast, the S&P 500’s worst 10-year period (the same 2000 to 2010 period) was -2.0% per annum, an 18% fall in value.

Over the last 10 years (data to October 2025), the S&P 500 has returned 16.9% per annum (376% total return), compared to only 13% per annum (239% total) for Findlay Park American. Clearly in hindsight it would have been better to have been invested in the index over the latter period, but when we are making fresh investment decisions looking forward, we must use the tools we have, such as the predictability of returns (and risk-adjusted returns) in trying to achieve our desired outcomes.

Nothing in investing is guaranteed, but if I have one investment that has a high likelihood of returning between 8% and 15% a year against one that returns between -2% and 18%, I prefer the former. This is incredibly valuable for what we are trying to do, which is to enable all of our clients to have real growth (inflation adjusted) in their wealth over the long term rather than simply thinking about beating an arbitrary stock index. Consistency aids future planning (be it for retirement, gifting or annual expenditure) and allows people to enjoy their lives with peace of mind.

There are plenty of ways to skin the proverbial investment cat and multiple may be right at the same time, but for very different reasons. The important thing is to have a reason for your approach and make sure it is repeatable, but adaptable in the face of a changing environment. Our focus on high quality companies that can survive in times of economic hardship and then come out stronger and prosper in the good times may seem dull, but should result in more predictable growth than an index that is effectively a momentum call.

James Richards, Chartered FCSI

Investment Director

Glossary of Terms
 

• Compounding: In financial terms, compounding is the process where the returns on an investment (interest, dividends, or capital gains) are reinvested to generate their own returns over time. Often described as "interest on interest," it transforms a linear growth pattern into an exponential one as the investment "snowballs".

• Dividend yield: A financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is expressed as a percentage.

• Gilt: A bond issued by the UK government. They are generally considered lower-risk investments because they are backed by the government.

• Total return: The overall return on an investment, combining both capital appreciation (the increase in share price) and any dividends or interest received.

Important information

This article is intended to be Walker Crips Investment Management's own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN:226344) and is a member of the London Stock Exchange. Registered office: 128 Queen Victoria Street, London, EC4V 4BJ. Registered in England and Wales number 4774117.