Investment Process

Investment Process: Oversight of the investment management function where investment management is performed by the Company
Where the investment management function is not delegated to a Delegate Investment Manager, for example in relation to the CoRe Series, the decision-making process will be undertaken by the Investment Team.
CoRe Series: CoRe Series is a UCITS umbrella scheme with 30 sub-funds. All of its sub-funds are established as fund-of-funds that invest in underlying funds that comprised primarily of Luxembourg authorised UCITS with additional investments being made in retail OEICs that are authorised by the Financial Conduct Authority. The underlying funds held by the sub-funds of CoRe Series are a mix of equities and bond funds that are managed by leading international managers.
Where investment management is performed by the Company (for example in relation to CoRe Series) the Investment Team will analyse the universe of relevant funds for the various investment strategies being undertaken. The Investment Team will narrow down the universe of funds on which investment due diligence will be carried out in order to establish which funds are appropriate from an investment perspective. The Investment Team will also provide cash management in relation to cash to be held by the Funds of the CoRe Series for liquidity purposes.
The Investment Team will review the proposed investments under consideration. As part of this review the Investment Team will amongst other things, check for any liquidity issues, investment risk issues and the impact of the proposed investments on the existing Funds, to the extent possible and practicable.
The CIO will approve (or reject as the case may be) initial investments to be made in respect of underlying funds recommended by the Investment Team. Subsequent or top-up investments in underlying funds that have been approved for initial investment by the CIO may be made by the Investment Team (without the requirement for specific approval by the CIO in respect of top-up investments) in accordance with the investment objective, strategies and guidelines of the relevant Fund. If a proposal is rejected, an investment by a Fund will not be made and a suitable alternative will be sought (where applicable) based on the investment objective, strategy and investment restrictions of the relevant Fund.
Once the CIO is satisfied the proposed investments may be suitable for a Fund, pre-trade compliance checks are conducted by the Investment Team. These checks include a review of the Prospectus of the Fund, any applicable investment restrictions, limits and guidelines of the relevant Fund. In addition, the Investment Team will review the risk report produced by the CRO including stress tests and scenario analysis produced by the permanent risk management function and consider any matters arising therefrom.
The Investment Team will at all times consider the risk/reward trade-off associated with any investment/proposed investment and will attempt to achieve a satisfactory balance of risk and reward, in line with the Fund’s objectives. The Investment Team may seek to benchmark any suggested investment against other opportunities in the marketplace, in order to ascertain the relative merits of the investment opportunity.
New Acquisitions regarding first time investments.

The Investment Team completes a rigorous and disciplined investment process when making first time investments in underlying funds, which involves detailed research being carried out by the Analysts, preparation of an investment proposal by the Investment Team and approval of the investment by the CIO. For first time investments, the Analysts research underlying investment themes and identify fund managers who meet the investment strategy of the fund of funds. When carrying out investment research the data that is considered by the Analysts include both qualitative and quantitative analysis in the evaluation, selection and monitoring of underlying funds and their investment managers. In conducting quantitative analysis, the analyst reviews various metrics such as a Fund’s risk adjusted returns, performance consistency correlation, up/down market capture, active share, tracking error and expense ratio. The Analysts prepare an investment report for consideration by the CIO. Upon approval thereof by the CIO, the CIO will set out the underlying investment themes and the Investment Team will organise meetings with the underlying fund managers. Once the Investment Team has done appropriate analysis and an underlying fund is deemed as an acceptable investment, an investment proposal is drawn up by the Investment Team, which will be reviewed by the CIO.

In performing this review, the CIO will review the investment proposal and the operational due diligence report on the underlying fund under consideration and investigate any matters which they consider unusual or deviating from standard market practice. Such items could include, but are not limited to fee arrangements, performance history, regulatory status or any other matters relating to the operation of the underlying funds. Investigative actions to be taken may include the request for further information in the form of a specific report into the unusual or deviating issue or where appropriate, request the Investment Team to research the matter and report thereon. The information contained in the investment proposal includes a summary of key issues, backed up by documents typically including the relevant offering documents, the most relevant terms and conditions, the latest annual report and the marketing presentation of the underlying fund under review. The CIO will consider any specific risks highlighted through their review of the investment proposal and other background reviews that may be submitted by members of the Investment Team.

Once the CIO is of the view that a proposal may be suitable for a Fund, the Portfolio Managers review the prospectus of the underlying fund, together with the operational due diligence summary and any relevant reports or findings prepared by the CIO to ensure that the proposal is in compliance with the investment objective, strategy and investment restrictions of the relevant Fund. The CIO and Portfolio Manager will review the risk report received from the CRO and consider any matters arising therefrom. They will consider any concerns concerning the overall suitability of the investment proposal. The CIO will reject the proposal if unsuitable and if a proposal is rejected, an investment in the underlying fund may not be made and a suitable alternative will be sought based on the investment objective, strategy and investment restrictions of the Fund. The CIO arrives at an investment decision on the basis of the results of their consideration of the points set out above and having regard to the investment objective of the Fund for which the investment proposal has been made. The main factors in their decision making process include:

(a) the performance record, including the volatility and risk profile, of the underlying fund;

(b) the prospects of success of the investment strategy of the underlying fund, including an assessment of the underlying assets;

(c) the organisation of the underlying fund manager, and

(d) any other aspects of the due diligence that may be relevant to the specific investment decision.

The Portfolio Manager will also have regard to the cash availability and FX implications of the proposed investment, taking into account the impact on the overall risk parameters and liquidity of the respective Fund. Once the CIO makes an investment decision the Portfolio Manager will provide the CIO with operational assistance by, for example, sending completed subscription or redemption forms (in respect of investment in underlying funds) and will forward such documentation to the Administrator and Depositary for processing on behalf of the relevant Fund. Once a trade has been placed, following its execution the Depositary will provide an email confirmation to the Investment Team that the trade has been executed. Monitoring of fund-of-funds.

In respect of the management fund-of-funds (where no Delegate Investment Manager has been appointed), it is intended that the Investment Team will report to the CIO on a monthly basis in respect of the Fund’s investment strategies, policies and investment performance to ensure it is satisfied they meet with the Fund’s requirements. In normal circumstances the Investment Team will have access on a daily basis to the portfolio holdings, risk attribution, net and gross exposures, VaR calculations and liquidity profile, which will assist it in monitoring the performance of the relevant Funds. The reports from the Investment Team will include reports on performance of the portfolio of each Fund, total returns and reports on the performance of individual underlying funds. The Depositary will also provide reports to the CIO and the relevant Designated Person in respect of investment breaches, if any. On a quarterly basis the Investment Team will report to the Board which will typically include (a) confirmation of the adherence of the relevant Fund’s to their investment policies and strategies; (b) performance of the Funds, including absolute and relative performance, the performance against the relevant benchmark indices, where relevant, and the performance against similar funds and peer groups over various time periods.

The Investment Team will monitor the NAV of each of the Funds and the NAV of each of the underlying funds based on daily reports received from the Administrator.

The monthly performance report provided to the CIO will, for example, report on matters such as the NAVs of the underlying funds, the calculation of performance (based upon NAV and gross expenses) showing for each underlying manager the performance year-to-date, monthly performance current year, total subscription and redemptions by investors in the Funds, the aggregate cash position and the hedging of the currency exposure. Additionally, these reports show for each share class of the Fund as well as the relevant benchmarks(s) the performance year-to-date and monthly performances current year. In addition, the Investment Team will collate documentation received with respect to the underlying funds, such as marketing material, monthly factsheets, monthly investment reports from the underlying fund managers and annual and semi-annual reports. In respect of the cash management of the Funds, the Investment Team will prepare an analysis of the projected cash balance, including current cash positions, projected investments and disinvestments, subscriptions and redemptions for each Fund and projected expenditures based on information received from the Administrator. The Investment Team will also carry out a daily assessment of exposure to foreign currencies and determining whether adjustment of the FX hedge is required based on daily reports received from the Administrator, if relevant to the Fund.

All identified issues will be included in the reports provided to the CIO. The CIO will also receive exceptional reports from the Investment Team, should material issues arise within the normal monthly reporting cycle which will include passive and inadvertent breaches. This ensures that the CIO and by extension the Board have all the relevant up to date information at all times. The CIO or the Board may decide that it is necessary to convene a Board meeting to discuss any issues disclosed in such reports and in the event a Board meeting is convened the Board as a whole will then determine the appropriate course of action. The Investment Team may consult with the CIO to consider whether any particular underperformance ought to be notified to the Board in advance of a quarterly Board meeting. Normally such issues will be dealt with by the Board at the quarterly meeting. In the event of an investment breach, the Investment Team or CIO will notify the Board and Depositary.

Dis-investment

Dis-investment can occur for a number of reasons including, but not limited to, redemption requests, rebalancing requests, where the risk/return proposition is no longer considered attractive due to changes in prices, market movements, and developments relating to the asset itself or where dis-investment is required to avoid breaches or potential breaches of risk limits. The portfolios of the Funds are adjusted periodically by the Investment Team based on subscriptions and redemptions into and out of the Funds and other factors as may be required. The Investment Team receives reports from the Administrator on a daily basis, which sets out details of any subscriptions/redemptions occurring for each Fund. The Investment Team will consider the rebalancing needs of the portfolio of each of the Funds presented by the approved investment universe. Redemptions from underlying funds will be processed by the Investment Team sending a redemption instruction to the Depositary for onward submission to the administrator of underlying fund. In determining which underlying funds should be disposed, the Investment Team will consider a number of criteria including without limitation: compliance with the Fund’s investment strategy and guidelines, the liquidity of the underlying funds, the costs and charges of realising investments, and the overall composition and balance of the portfolio. In the case of a large net redemption from a Fund, the Investment Team will endeavour to dispose of proportionate holdings in underlying funds so as to ensure continuity and stability of the Fund’s portfolio of holdings.