MANAGER SELECTION

Although excellence exists across all asset classes, few investment managers have demonstrated expertise across all financial markets. The purpose of the manager search process is to identify those investment houses most likely to excel for a given mandate.

Active versus passive

Active money managers seek to maximise returns by investing in a carefully selected sub-set of a given asset class. By contrast, passive investment requires replication of the selected financial market, which is usually defined by an index. The two approaches bring with them different types of risk. For the passive investor, the main risk is that the selected asset class performs poorly. For active managers, the main risk is that assets excluded from the portfolio outperform those selected for inclusion.

Ranges not benchmarks

Managers usually perform best when allowed to apply the full range of their skills and ideas rather than when asked to follow a particular benchmark within tight parameters. We aim to provide managers with enough freedom to express their views whilst applying sufficient control to protect the investor.

Negotiation of service level agreements

Although fees and charges are rightly seen as the key service level component, if relationships between managers and clients are to work smoothly, the frequency and detail of information flows needs to be agreed in advance.