For professional advisers only. LGT Vestra Volare Multi-Asset Fund Range: Investment Guide

Transcription

1 For professional advisers only LGT Vestra Volare Multi-Asset Fund Range: Investment Guide

2 Contents Introduction 2 An overview of the Investment Process 3 Investment and research capability 5 How are funds selected for use within the Volare Multi-Asset Funds? 7 How are funds monitored and managed by LGT Vestra? 10 Platform availability 11 Summary 12 Appendix 13

3 Introduction The Volare fund range The Volare fund range is composed of four risk-rated portfolios which have three targets assigned to each. These three targets are volatility, annualised return and maximum loss, allowing both the adviser and their client to understand the risk/reward that we are expecting each portfolio to achieve in any year. The return and volatility targets are an average over a five year time horizon. The Maximum Loss figure represents the worst possible return in a 12 month period. We also manage the Volare Strategic Income fund, which targets an income yield of 3.5% per annum. The Volare funds are shown below along with their Dynamic Planner risk rating and the three targets assigned to each: *The figures quoted are targets, actual results may be less or more than the figures shown. Volatility and Return % figures are representative of a five year time horizon. The Dynamic Planner risk rating is on a scale of

4 An overview of the LGT Vestra Investment Process As per the diagram below, the LGT Vestra Investment Committee sits at the heart of our investment process and is ultimately responsible for the firm s investment decisions The Investment Committee is comprised of a number of experienced internal Investment Managers, strategists and researchers. The role of the Committee is to set the overall investment strategy of the firm and to disseminate the investment recommendations to the firm s Investment Managers, including the Volare Investment Committee. As a matter of course, the Investment Committee meets monthly to discuss the market outlook but can, and does, meet at other times in response to events that occur between meetings. The process starts with a top down discussion of the macro economic outlook. This leads into a discussion of our market views which are published in a detailed briefing document after the meeting. As part of its analysis, the Investment Committee takes feedback from the various in-house research teams, which cover Authorised Collectives, Fixed Income, Equity, Investment Trusts and Non-Standard Investments. These teams carry out research on their specific asset class and/or sector and produce a list of the acceptable and approved investment solutions. Following the Investment Committee meeting, any strategic or tactical investment decisions are communicated to the Volare Investment Committee. The Volare Investment Committee takes this direction from the Central Investment Committee and the outputs from the research teams to define the best method to execute the decisions of the Investment Committee and to position the Volare funds appropriately. The MPS Committee s principal responsibility therefore is to implement the agreed investment strategy as set out by the LGT Vestra Investment Committee and to ensure that the models are aligned with the core house view. 3

5 Process As part of its remit the Volare Investment Committee is tasked with combining the top-down asset allocation as outlined by the Investment Committee with the bottom-up fund selection from the range of funds approved by the Authorised Collectives Committee. This is summarised in the diagram below. 4

6 Investment and research capability Investment Committee - Jonathan Marriott Chair of Investment Committee, Chief Investment Officer Fixed Income & Asset Allocation Strategist (37 years) - Meena Lakshmanan Head of Investment Solutions/Partner (17 years) - John Jopp Investment Manager, Partner (17 years) - Neil Pedley Investment Manager, Partner (34 years) - David Turner Investment Manager, Partner (38 years) - Jenny Tozer Investment Manager, Partner (33 years) - Sanjay Rijhsinghani Investment Manager, Partner (22 years) - Frances Halford Investment Manager, Partner (20 years) - Rohit Ahluwalia - Head of International Investment Solutions (14 years) - Tom Wicks - Portfolio Manager (14 years) Investment Committee contributors - *David Scott Chairman, Partner (33 years) - *Ben Snee Managing Partner (14 years) - *James Follows Head of UK Equity (25 years) - *Russell Harrop Head of International Equities (23 years) - *Jeremy Sterngold Global Fixed Income Strategist (9 years) - *Jamie Frere-Scott Head of Authorised Funds (8 years) - Tom Macpherson - Volare Investment Manager (6 years) - Phoebe Stone - Volare Investment Manager (6 years) 5

7 Authorised Collectives Committee - Jamie Frere-Scott Head of Authorised Funds (8 years) - Jonathan Marriott Chair of Investment Committee, Chief Investment Officer Fixed Income & Asset Allocation Strategist (37 years) - Meena Lakshmanan Head of Investment Solutions/Partner (17 years) - Rohit Ahluwalia - Head of International Investment Solutions (14 Years) - Jenny Tozer Investment Manager, Partner (33 years) - John Jopp Investment Manager, Partner (17 years) - Frances Halford Investment Manager, Partner (20 years) - Tom Macpherson/Phoebe Stone MPS Investment Managers (6 years) - *Sanjay Rijhsinghani Investment Manager, Partner (22 years) - *Thomas Ledger Trainee Investment Manager (2 years) - *Lydia Brook Assistant Analyst (3 years) - *Noel Craven Investment Manager (17 years) *Non-voting member Volare Investment Committee - Sanjay Rijhsinghani Investment Manager, Partner (22 years) - Tom Macpherson - Volare Investment Manager (6 years) - Phoebe Stone - Volare Investment Manager (6 years) - Henry Wilson - Trainee Investment Manager (2 years) - Rohit Ahluwalia - Head of International Investment Solutions (14 years) - Oliver da Cunha - Partner and Bespoke Models Manager (10 years) 6

8 How are funds selected for use within the Volare Multi-Asset Funds? Our approach to funds At LGT Vestra we use an investment process that implements a multi-faceted approach to establish a list of investment strategies that offer an alignment of interest, consistent investment approach and proven performance. We favour fund managers that are aligned with the long term interests of clients. We focus on managers with a clearly articulated philosophy and demonstrable process. We look for managers that deliver performance which is commensurate with their stated investment objectives, style and process. We favour strategies that represent efficient allocation of client s assets over the long-term. We believe in a risk-adjusted return framework for analysis which provides a uniform approach to our research. We focus on a range of factors that allows an unbiased comparison of strategies on a like for like basis. We adopt a whole of market approach, combining both qualitative and quantitative analysis. A crucial aspect of the Volare fund offering is a dedicated fund research capability which includes a number of individuals whose responsibility is to maintain and review an approved list of both active and passive investment funds. A significant amount of time and resource is spent in researching and meeting with both fund managers and their respective teams. This allows LGT Vestra s Research Team to evaluate and understand the respective investment process, characteristics, costs, past performance and importantly prospects for future performance. Summary of the key attributes of our fund analysis LGT Vestra place significant focus on the analysis of risk characteristics of a particular fund in order to understand how it could and should behave across differing market conditions. The LGT Vestra Volare funds are constructed from a list of approved collective funds that the Authorised Collectives Committee has specifically approved. In order for these funds to be selected they are subject to qualitative and quantitative analysis that is conducted by the in-house Research Team. Importantly, the Volare funds are managed in real time and all the underlying funds are continuously monitored by our investment professionals. They are supported by a Research Team that select and recommend the most appropriate funds for a given requirement. It is only when the Research Team and the Authorised Collective Committee have fully understood and analysed the investment process and underlying portfolio, that the fund will be added to the approved fund list and therefore considered for the LGT Vestra Volare multi-asset funds. Since inception of the LGT Vestra Volare funds, we have always have used a process that combines the management of the portfolios within published bands of volatility and the LGT Vestra Investment Committee recommended asset allocation. Critically, this recognition of the importance of investment volatility has underpinned the way the portfolios are managed and has led to consistent repeatable returns over the long term. 7

9 Below is the quantitative and qualitative approach that the Authorised Collectives Committee takes when both looking at possible new funds and reviewing existing funds. Initial assessment Using recommendations and the objectives from the Investment Committee, the criteria for new funds is set. The Research Team uses Morningstar Direct to filter down the potential universe of funds to find those that fit these criteria. Filter onshore/offshore funds as appropriate: Total assets under management in a given strategy Management fees Currency and domicile Specific portfolio analysis - Market cap - Regional and sector exposure - Style bias and persistency, number of holdings Performance analysis Once the pool of funds has been initially filtered, a more in depth analysis is carried out in order to assess the suitability of the funds. As part of the performance analysis the following are all measured and analysed: Beta and Volatility (Standard Deviation) Downside and upside capture Information and Sharpe ratios Correlation 1, 3, 5 and 10 year performance (where available) Qualitative analysis Funds that meet our standards through the initial filtering process and performance analysis are then assessed with a more qualitative approach. Where possible this will include a meeting with the fund manager, but starts with desk-based research where the below factors are considered and assets to ensure suitability. Business - behemoth vs. boutique, brand, reputation People/Infrastructure - Individual/team, experience and resources, key man risk, succession planning and systems Philosophy - Clearly articulated and rational Process - Consistent and repeatable Investment style - Growth/value/income/defensive, ensuring that this is commensurate with philosophy and process Risk management - Included or ad hoc, restrictive or supportive 8

10 Once the above factors have been researched and assessed, the Research Team s analysis and views will be discussed by the Authorised Collectives Committee. The Committee will discuss the analysis at a monthly meeting, or ad-hoc meetings if required, and will vote on inclusion or removal of the fund from the approved list. The Research Team s analysis will propose a category by which the fund is Core, Extended, Review or Sell. This will be debated by the Committee and a majority vote is required for inclusion or removal of a fund from the approved list. The Volare Investment Managers use these ratings and the analysis/research of the Authorised Collectives Committee to construct the volatility managed Volare funds. Research tools The following sources of information are available to our teams when selecting models and are used for investment research: Independent research Absolute Strategy research Capital Economics research Sell side research Various UK and international investment banks and boutiques Databases Morningstar Analytics Bloomberg PerTrac MorningStar Internal Factset Market data Bloomberg ProQuote Reuters Factset Investment bank and brokers sell side research We have access to the research of the top global investment banks including: Goldman Sachs Credit Suisse Barclays JPMorgan Deutsche Bank 9

11 How are funds and models monitored and managed by LGT Vestra? The Volare Investment Committee formally reviews the asset allocation of the Volare funds on a monthly basis. An important characteristic is the management of investment risk and ensuring the funds remain within published bands of volatility. The overall volatility of each fund is regularly monitored and operates within the context of a hard ceiling and soft floor. This means that if the upper level is breached, we will seek to reshape the portfolio to bring it back within its discreet volatility range. If volatility of a portfolio falls below the lower level, we may seek to retain the asset allocation/fund selection depending on market conditions and LGT Vestra s view on markets. The management of the Volare portfolios volatility includes measuring the correlation of the underlying funds and asset allocation with a view of understanding how they react during differing market cycles, thus reducing the likelihood that they do not all move in the same direction at the same time. This could mean that they may sacrifice some potential upside investment performance, but that is a decision that they are prepared to take in order to manage effectively a client s exposure to investment volatility. A key principle therefore guiding the management of the Volare multi-asset funds is the preservation of client s capital in terms of managing investment volatility in periods of market turbulence. In terms of a soft floor if market volatility is low LGT Vestra will not go actively hunting riskier funds or adopt a more aggressive asset allocation in order to deliberately heighten a portfolio s risk profile. We would maintain our investment stance and wait for market volatility to return to more normal levels. 10

12 Platform availability The Volare multi-asset funds are available across a large range of platforms, as listed below. Aviva Ascentric Novia Novia Global Zurich Nucleus Old Mutual Alliance Trust Standard Life Standard Life Elevate Praemium Praemium International Fidelity Funds Network James Hay Cofunds Platform One Aegon 7IM Scottish Widows Canada Life A J Bell Upmost SG Hambro The Volare funds can be found on the platform by searching name or ISIN: FP Volare Cautious Fund: GB00BYQ4HK23 FP Volare Balanced Fund: GB00BYQ4HM47 FP Volare Growth Fund: GB00BYQ4HP77 FP Volare Strategic Income Fund: GB00BYQ4HS09 11

13 Summary The Volare fund range provides a suite of investment solutions that clients and their financial advisers tell us satisfy many of their investment requirements. We have been extremely diligent in the way we have developed our Volare multi-asset funds and by focusing on our three targets when building the funds, our vastly experienced Committees are able to ensure consistency and performance across each of our offerings. Our thorough and extensive process of choosing collectives means that only funds matching our credentials and specific requirements, with prospects for future performance, are invested in. Our experienced teams monitor performance of the funds, whilst regularly rebalancing, to ensure preservation of capital and that each client s portfolio is closely aligned with their chosen fund. 12

14 Appendix Biographies Jonathan Marriott With over 30 years investment experience, Jonathan is LGT Vestra s Chief Investment Officer. He is also responsible for managing discretionary portfolios within the Private Office team. Prior to joining LGT Vestra, he worked for Deutsche Bank s Private Wealth Management division, latterly as Head of Portfolio Management for the UK. He has a degree in Natural Sciences from Cambridge University and is a Chartered Fellow of the Chartered Institute for Securities & Investment. In 2012, Citywire Wealth Manager listed him in the Top 100 Wealth Managers in the UK. Meena Lakshmanan Meena is a Partner and Head of Alternatives at LGT Vestra. She is a key member of the Investment Committee and is involved in asset allocation for institutional and larger client portfolios. Meena is an active member of the product selection committees at LGT Vestra. Having joined LGT Vestra from its inception she has contributed to the investment process, differentiating it from its peers. Previously, Meena worked at Russell Investment Group as a member of the Hedge Fund and European Equity team, working on quantitative analysis including risk management, portfolio construction and alpha generation. Following this Meena was an Asset Manager for GLG Partners LP, covering risk management, asset allocation and quantitative strategies, working closely with the Quant Team to design new alpha strategies. Meena began her investment career as a hedge fund analyst and asset allocator at Atlas Capital Ltd. She has a PhD in Operations Research from Cambridge. Sanjay Rijhsinghani Sanjay is a Partner at LGT Vestra, specialising in managing global investment mandates with multi asset class solutions, and has developed the capability to provide a personalised options trading facility for private clients. Previously he was at UBS WM (UK) Ltd where he managed institutional funds along with private client money and prior to this he was an Investment Director at Laing & Cruickshank, and manager of the OM BD technology fund at Brewin. 13

15 Important information LGT Vestra LLP is authorised and regulated by the Financial Conduct Authority (FCA). Our registration details are set out in the FCA Register: Firm Reference No , Registered in England and Wales: OC Registered office: 14 Cornhill, London, EC3V 3NR. This document is for professional advisers only and should not be passed to retail clients. It is for information only and should not be construed as advice or an offer, invitation or solicitation to enter into any financial obligation, activity or promotion of any kind. Past performance is not an indication of future performance, capital is at risk and the value of investments and the income derived from them may fluctuate and may be affected by exchange rate variations. The information and opinions expressed herein are the views of LGT Vestra LLP and are based on current public information we believe to be reliable but we do not represent that they are accurate or complete and should not be relied upon as such. Any information herein is given in good faith, but is subject to change without notice. No liability is accepted whatsoever by LGT Vestra LLP, employees and associated companies for any direct or consequential loss arising from this document. This document is not for distribution outside the European Economic area. LGT Vestra LLP is a limited liability partnership registered in England & Wales. Registered Office: 14 Cornhill, London EC3V 3NR. Registration number OC LGT Vestra LLP is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange LGT Vestra (Jersey) Limited is incorporated under the laws of Jersey. Registered office: Charles Bisson House, New Street, St. Helier, Jersey JE2 3TE. Registration number LGT Vestra (Jersey) Limited is regulated by the Jersey Financial Services Commission in the conduct of investment Business under the Financial Services (Jersey) Law 1998, as amended. LGT Vestra US Ltd. is authorised and regulated by the Financial Conduct Authority in the United Kingdom and is a Registered Investment Adviser with the Securities & Exchange Commission in the United States. 14

16 LGT Vestra LLP 14 Cornhill London EC3V 3NR LGT Vestra US Ltd 14 Cornhill London EC3V 3NR LGT Vestra (Jersey) Ltd Charles Bisson House, New Street St Helier, Jersey JE2 3TE Important information LGT Vestra LLP is authorised and regulated by the Financial Conduct Authority (FCA). Our registration details are set out in the FCA Register: Firm Reference No , Registered in England and Wales: OC Registered office: 14 Cornhill, London, EC3V 3NR. This document is for professional advisers only and should not be passed to retail clients. It is for information only and should not be construed as advice or an offer, invitation or solicitation to enter into any financial obligation, activity or promotion of any kind. Past performance is not an indication of future performance, capital is at risk and the value of investments and the income derived from them may fluctuate and may be affected by exchange rate variations. The information and opinions expressed herein are the views of LGT Vestra LLP and are based on current public information we believe to be reliable but we do not represent that they are accurate or complete and should not be relied upon as such. Any information herein is given in good faith, but is subject to change without notice. No liability is accepted whatsoever by LGT Vestra LLP, employees and associated companies for any direct or consequential loss arising from this document. This document is not for distribution outside the European Economic area. LGT Vestra LLP is a limited liability partnership registered in England & Wales. Registered Office: 14 Cornhill, London EC3V 3NR. Registration number OC LGT Vestra LLP is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange LGT Vestra (Jersey) Limited is incorporated under the laws of Jersey. Registered office: Charles Bisson House, New Street, St. Helier, Jersey JE2 3TE. Registration number LGT Vestra (Jersey) Limited is regulated by the Jersey Financial Services Commission in the conduct of investment Business under the Financial Services (Jersey) Law 1998, as amended. LGT Vestra US Ltd. is authorised and regulated by the Financial Conduct Authority in the United Kingdom and is a Registered Investment Adviser with the Securities & Exchange Commission in the United States.