Page 10 - Renshaw, M&T - review report - Febr21
P. 10

Principle 3: Liquidity                          Principle 7: Portfolio investment
                                                               management style
               As financial markets offer the opportunity
               to buy and sell assets easily (with minimal     No single investment management style
               transaction costs and risk involved), they      can produce superior returns in a particular
               provide a high level of liquidity. The funds    asset over the long term. This makes it
               selected and the assets in which model          important to hold a mix of different
               portfolios invest predominantly offer daily     management styles in a portfolio to take
               liquidity, meaning your funds are readily       advantage of opportunities as they arise in
               available with short notice if unforeseen       the economic cycle.
               events require this to occur.
                                                               Principle 8: Currency management
               Principle 4: Markets
                                                               The portfolios will utilise both managers
               Model portfolios only include assets that       that hedge their currency exposures and
               are readily available in public markets         those that do not – this positioning will be
               where there are liquidity, regulatory and       dependent on market events and our
               transparency regulations in place to protect    longer-term views.
               your interests.
                                                               Principle 9: Fees and taxes
               Principle 5: Active investment
               management                                      Fees and taxation implications are included
                                                               in a portfolio analysis due to the impact
               During periods of market inefficiency,          high fees and poor tax management can
               active fund managers can outperform             have on an investors’ returns over the
               competitors and the relevant market index       short and long term. Portfolios are
               through prudent investment selection and        constructed with investments that charge
               ongoing monitoring.                             competitive fees, with a preference for
                                                               those that have fee structures aligned to
               The better-quality active managers have         the interests of investors and aim to be tax
               demonstrated their ability to outperform        efficient.
               index funds over the long term. We select
               fund managers on the basis of their quality
               and the likelihood of achieving superior
               returns relative to competitors and/or the
               relevant index over the long term.
               Principle 6: Strategic versus dynamic
               asset allocation

               Strategic asset allocation (SAA) involves
               allocating assets in a portfolio to get the
               best return for a given level of risk. SAA is
               determined based on expected long term
               asset class returns and is guided largely by
               historical data.

               Dynamic asset allocation (DAA) adds value
               to a portfolio by taking medium term
               positions in an asset class that differ from
               the SAA position. It is intended that these
               medium-term tilts or deviations will both
               protect the portfolio in a downturn and
               potentially boost returns in an upturn.
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