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10 months ago

Blue Chip Issue 82

  • Text
  • Financial
  • Advisors
  • Investments
  • Equity
  • Wealth
  • Offshore
  • Asset
  • Portfolio
  • Investing
  • Global
  • Momentum
Welcome to our Investing Offshore Special Edition of Blue Chip. a quarterly journal for the financial planning industry and the official publication of the Financial Planning Institute of Southern Africa NPC (FPI). Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry.

INVESTMENT The portfolio

INVESTMENT The portfolio construction process has three steps: Firstly, multi-asset class for risk management at a total portfolio level. This step revolves around setting the ideal asset allocation on Nina Saad Mohammed Sibda a risk-calibrated basis. We define the asset classes, typically traditional listed asset classes, both local and global. It is vital here to gauge and understand the volatility and interdependencies among asset classes and the expected returns through different market cycles on a forward-looking basis. The second step is multi-strategy for consistent returns in dynamic market conditions. Naturally, there will be periods in which the asset class will not deliver on the required outcome. As such, it is necessary to find alternative strategies to include to improve the certainty of achieving the objective. This increases the robustness of the portfolio and the probability of delivering on the outcome. Examples of the different strategies include risk premia within listed equities, including quality, value and momentum, and within a fixed interest duration, credit and yield curve. The third step involves mandate selection. Mandate selection is for specialists and can significantly add or destroy value within a portfolio. It is vital to understand investment manager philosophies in depth to know the potential outcome in various markets. We typically focus on early-stage investment managers with great track records and low assets under management. We prefer to appoint investment managers that integrate ESG factors in their processes. We only use active mandates where there are specific and demonstrable net of fee skills; otherwise, we use passive mandates. With us, investing is personal, as the focus shifts dramatically when you invest based on achieving a specific goal. The key lies in constructing the portfolio in the best way to deliver on the chosen objective. RETAIL PORTFOLIO SOLUTIONS The Momentum Retail Portfolio Solutions team consists of five investment professionals with more than 80 years of collective experience in financial Jako de Jager Ronnie Bornman markets. The team is headed by Jako de Jager, who has been with the company for more than 20 years. After completing his post-graduate studies, he learned and applied his trade in the traditional multi-management and solution construction disciplines. He has been instrumental in developing and implementing new and exciting local and global investment strategies forming part of our outcome-based solutions. Ronnie Bornman is the appointed joint portfolio manager responsible for the range of Momentum retail outcome-based solutions. These include the Momentum Focus and Target Fund of Funds and asset-class-specific funds such as the Momentum Equity and Momentum Core Equity unit trusts. Bornman has been with the group for 10 years. Up to 2016, he was in an integral part of the advice and wealth management team. He holds a BSc in Mathematical Statistics and Operations Research and the CFA designation. The team manages solutions totalling R80 billion of client assets across a range of investment products and platforms, including assets housed on the Momentum Metropolitan Holdings balance sheet. The range of retail-focused fund of funds and unit trusts account for R18 billion of the total and spans no less than 13 funds. The team follows an outcomebased investing philosophy. Our portfolios are constructed and managed based on the client objective, which is built on the following pillars: • A pre-determined time horizon • A fund-specific risk budget where we determine an acceptable level of risk, which indicates how much capital may be placed at risk in adverse market conditions. This is usually stipulated over a rolling 12-month period • A return objective that we believe is reasonable given the risk taken and considering market conditions. Once we have defined the client objective, we apply our three-step portfolio construction process. This process consists of selecting the optimal strategic asset allocation where we carefully combine diversified and differentiated asset classes for optimum risk management; choosing the most appropriate investment strategies within each asset class to enable consistent returns in dynamic market conditions; and focusing on mandate or manager selection and the optimal combination of these together with investment mandates. Our solutions can incorporate passive, active and smartbeta strategies across multiple investment strategies. These can be combinations of local and global asset classes and incorporate local and global currencies. The result is the delivery of a holistic value proposition. 34 www.bluechipdigital.co.za Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider (FSP 6406).

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