Page 14 - Client Review Report Redacted

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Selection Process

Taking into account the investment policy, the selection process encompasses a number of steps.
The process is flexible in terms of order of execution, and the emphasis placed on each element of
the process may vary depending on the parameters and market conditions, and to ensure due
consideration is given to strategies that may be innovative and appropriate to evolving
circumstances.

1. Consideration of the parameters for each 3. Consideration of research from other sources
portfolio (investment universe) This includes review and analysis of data from
Clients will usually provide an objective which sources such as retail research houses,
includes parameters or specific requirements. institutional research coverage and broker
There will be times where this does not happen; reports.
however, this is quite rare. Where this does
occur, it is important to attempt to extract any 4. Meetings with fund managers
biases or predispositions that could cause On a stand-alone basis, this is the most important
complications at a later date. part of the research and selection process, as it
Where no requirements or parameters are allows detailed investigation into their philosophy
provided, our investable universe is guided by and management style.
the objective of the portfolio. This can result in Meetings with portfolio managers are focused on
both a very large and very small universe. ‘5 p’s’:
Where the universe is overly large, we will
screen-out managers and products based on an a) people
assessment of best practice and the b) process
identification of an investment edge. Where the c) parent
universe is so small it hinders sound portfolio d) price, and;
construction or meeting of objectives, we will re- e) performance.
engage with the client to ensure they are
comfortable with the direction of process and Meeting with senior analysts or other key
analysis. decisions makers is especially important where
there is a team-based approach, or a flat
2. Qualitative and quantitative analysis hierarchical structure is prevalent. For example,
Whilst the analysis and assessment of any where a strategy derives the majority of idea
product is somewhat backward looking, our generation and/or alpha from particular part of
analysis aims to be as forward looking as the market, then that analyst/sector head should
possible. This includes a particular focus on be engaged with. Where there is quite a heavy
whether the product and manager’s success is top-down approach and a senior economist or an
repeatable, whether the market environment now external consultant is used, they will also be an
and in the medium term is conducive to the integral part of the discussion.
manager’s style of investing, and whether the
team dynamic and quality staff will remain with
the organisation into the future.

Given the focus on being forward-looking, that
means that approximately 80% of our time is
spent on the qualitative assessment with the
remaining 20% spent on quantitative analysis.

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