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

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.