Page 11 - Lewin, Diana - Review Report - July 2020

Selection process Given the focus on being forward-looking,
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 portfolio (investment universe)
Clients will usually provide an objective
which includes parameters or specific
requirements. There will be times where
this does not happen; however, this is
quite rare. Where this does occur, it is
important to attempt to extract any biases
or predispositions that could cause
complications at a later date.
Where no requirements or parameters are
provided, our investable universe is
guided by the objective of the portfolio.
This can result in both a very large or very
small universe.
Where the universe is overly large, we will
screen-out managers and products based
on an assessment of best practice and the
identification of an investment edge.
Where the universe is so small it hinders
sound portfolio construction or meeting of
objectives, we will re-engage with the
client to ensure they are comfortable with
the direction of process and analysis.
2. Qualitative and quantitative analysis
Whilst the analysis and assessment of any
product is somewhat backward looking,
our analysis aims to be as forward looking
as possible. This includes a particular
focus on whether the product and
manager’s success is repeatable, whether
the market environment now and in the
medium term is conducive to the
manager’s style of investing, and whether
the team dynamic and quality staff will
remain with the organisation into the
future.
that means that approximately 80% of our
time is spent on the qualitative
assessment with the remaining 20% spent
on quantitative analysis.
3. Consideration of research from
other sources
This includes review and analysis of data
from sources such as retail research
houses, institutional research coverage
and broker reports.
4. Meetings with fund managers
On a stand-alone basis, this is the most
important part of the research and
selection process, as it allows detailed
investigation into their philosophy and
management style.
Meetings with portfolio managers are
focused on ‘5 p’s’:
a) people
b) process
c) parent
d) price, and;
e) performance.
Meeting with senior analysts or other key
decisions makers is especially important
where there is a team-based approach or
a flat hierarchical structure is prevalent.
For example, where a strategy derives the
majority of idea generation and/or alpha
from particular part of the market, then
that analyst/sector head should be
engaged with. Where there is quite a
heavy top-down approach and a senior
economist or an external consultant is
used, they will also be an integral part of
the discussion.