We have a unique vision about responsible, risk-targeted investing and we believe that to create real value for our investors we must adhere to our core values, which has led us to become the first multimanager signatory to the UNEP’s Principles of Responsible Investing with a view to integrating these principles into every level of our investment process.
A different mode of working with our investors:
- Every fund deserves a solution that meets its own specific needs
- The best long-term solutions are a process, not a product
- Partnering throughout the process with trustees, their consultants, and the underlying managers is key to creating a shared accountability for developing the most appropriate strategy and keeping it on track.
An adherence to global best practice in all our activities:
- In the rigour and robustness of our investment management process
- In the quality of our asset management, manager assessment, risk management and administrative technologies
- And in our code of ethics as regards:
- The transparency of our process and its associated costs
- The quality of our performance reporting and educational materials
- The sanctity of our clients' assets.
A different approach to delivering performance
The quest for return starts with the correct priorities:
- Ensure solutions match client requirements
- Add value at every step in the investment process:
- In identifying potential sources of uncorrelated alpha
- In the selection of the asset class blend to meet investors’ funding requirements
- In managing the asset allocation process within the risk budget parameters
- In the selection and on-going monitoring of multiple specialist managers
- Through effective implementation of each investor’s optimal strategy over time
- Focus on minimising multiple levels of risk
- Focus on minimising cost
- Maintain a continuous refinement of our performance (or alpha)-delivering processes
- Provide the full suite of legal platforms to service all investor types
- unit trusts
- pooled life license
- segregated portfolios.
Understanding your needs
What kind of client are you?
High or low client involvement – Identifying your governance budget
Some corporates and large retirement funds want to be intimately involved
in the decision-making and governance surrounding their investment strategy,
and they benefit from the considerable resources and services provided by
our Research and Development team for:
- Assessing and managing the viability of member choice options
- Identifying, assessing and stress-testing optimal investment
strategies
- Monitoring manager decisions, the on-going implementation of
a strategy and performance
- Monitoring administration functions and costs.
Investors who prefer more assistance in the decision-making involved in
their investment strategy and who find higher level governance reporting
to be sufficient for their needs, benefit from our full-service offering
of our pooled multiple-manager portfolios. These provide fiduciaries with
a comprehensive, on-going, planning, implementation, monitoring and reporting
service.
High or low risk budget
We encourage our clients to formulate an investment policy reflecting their
basic beliefs about how risk and return should be determined.
We ask our clients to articulate their tolerance of risk together with
preferences regarding the aggressiveness of the asset allocation and underlying
asset class strategies, asset allocation, style, sector and stock selection.
In this way we believe we can more effectively help clients reach their
investment objectives.
The better we understand our clients´ involvement
level and risk budget, the better we can help to structure appropriate investment
routes.
Investment Process
Our investment process is organised to implement our investment philosophy
on multiple levels.
How we select managers owes more to what each manager can bring to the
blend rather than how each manager performs in isolation.
Our quantitative and qualitative process of manager evaluations follows
a six-step investigation process that allows us to:
- Ferret out sources of differentiated alpha
- Integrate qualitative and quantitative inputs on manager assessments
through an interactive manager scorecard
- Assess the stability and probability of continuation of this
source of alpha
- Determine from multiple perspectives how well differentiated
this alpha source may be to that of other managers
- Create blends of managers where rigorous risk budgeting maximises
the blends exposure to high probability alpha generating strategies.
Our decision to capture every manager trade when it is exercised allows
us to:
- Meaningfully manage risk at both the aggregate and the building
block level at every point in time
- Rigorously analyse manager buying and selling patterns to derive
insights into manager trading skill, portfolio construction skill,
cash flow management skill, manager turnover and manager behavioural
biases
- Apply a rebalancing framework that trades off investor risk
of deviating from an optimal asset class to allow for periods
when asset classes may be in long term trends.
Our international allocations are treated as though they are part of a
single, integrated strategy.
Advantage Asset Managers and the UN Sustainable Investment Agenda
UN Initiative on Principles of Responsible Investing (PRI)
In August 2006, Advantage Asset Managers became the third South African signatory (after the Government Employees Pension Fund and Fraters Asset Management) to the UN's finance initiative known as Principles for Responsible Investment (PRI).
The PRI has formulated a set of global principles that can guide investors towards more sustainable investment practices that address better long term investment returns and align investment practices with the goals of the UN. These goals are to enhance the quality of life everywhere though their focus on social, governance and environmental considerations.
In becoming a signatory to this initiative, Advantage Asset Managers is agreeing to commit to identifying ways to gradually incorporate the PRI's suggested objectives, not just in specially target investment products, but across all our range of client solutions. For us, these principles can be interpreted as follows:
- We will encourage our asset managers to incorporate social, environment and governance issues into investment analysis and their decision-making process.
- We will be active fiduciaries on behalf of our clients, and exercise voting rights and participate in collaborate engagement initiatives that address policies to support social, environmental and governance initiatives.
- We will seek appropriate disclosure on social, environment and governance issues by the entities in which we invest.
- We will promote acceptance and implementation of the Principles within the investment industry through our interactions with our fund managers, consultant, our clients, and broader industry groups such as IMASA and ABSIP.
- We will work together with all these parties and the international community which are party to the initiative to enhance our effectiveness in implementing the Principles.
- We will report on our activities and progress towards implementing the Principles to this international collective.