ADVERTORIAL Resourcing
ADVERTORIAL Resourcing Creating the case for superior resourcing, Zietsman argues that, “In the true multi-asset space, traditional asset managers need to employ equity analysts in each sector, property specialists, credit and fixed interest teams – both locally and offshore. As the world becomes more ‘global’, it becomes increasingly hard to support the idea of one investment team making all these decisions. Blending five under-resourced multi-asset teams doesn’t solve the problem either. We select specialist managers across the globe in 15 asset classes, including the smaller ones. For example, teams run mandates in emerging Europe, Asia and Latin America. Different managers cover global sovereign bonds, inflationlinkers, corporate, high yield and emerging market debt. In SA, we have great single asset class managers to choose from. PMX’s investment team of 10 focus on asset allocation and finding top managers. Over 200 investment professionals work directly in the underlying portfolios selected by the PMX team.” inception, PMX has produced compelling investment results. Depicted in the previous charts are PMX’s standard Reg 28 compliant risk-profiled models since their inception versus wellknown balanced funds. “Profile 6” has a typical exposure to risk assets for a balanced profile. “What gives us great satisfaction is that our performance track record has been achieved in up and down markets. In SA, we generated great relative performance in the strong markets of 2012 as well as the weak markets in 2018. Most importantly, in neither instance did we have a strong directional view, which illustrates the power of intelligent diversification – we also didn’t follow the herd.” IN RISING MARKETS IN DECLINING MARKETS Fees Zietsman says that, “The arguments around ‘extra layers of fees’ is disingenuous. The rational person will simply add up the layers and look at the total. The combination of our fee, the underlying CIS manco, plus the weighted average fee to the underlying managers comes to around 1% on a balanced profile, which is very competitive. “It’s all about the efficiencies we get through scale. Investment management fees are a cost of production – assuming you can evidence performance.” Performance The visibility of model portfolio performance has been an issue for advisors. “This is a problem in the industry that we hope will be rectified soon,” says Zietsman. “It is in the interests of advisors and consumers that discretionary services get reported on consistently.” For due diligence purposes, PMX runs performance tracker portfolios on the Investec platform to allow advisors to audit and reconcile returns, which PMX is happy to make available. Since The Technology Edge PortfolioMetrix understood the importance of proprietary technology and the role a new generation of tools could play in linking advice and investment management. According to London-based Mike Roberts, Chief Proposition Officer at PMX, “We were highly cognisant of the processes that need to take place in an advisor’s office before any recommendation can be made. 20 www.bluechipjournal.co.za
ADVERTORIAL We evaluated the tools available to advisors and discovered significant shortcomings.” A better mousetrap PMX tech “smarts” are packaged in a proprietary system called WealthExplorer TM . PMX does not market its technology separately, which it sees as a competitive advantage. According to Roberts, “Designing advice and efficiency tools commercially for the mass advisor market means playing to the lowest common denominator. “Dealing exclusively with top advisors allowed us to incorporate a degree of sophistication often absent in similar toolkits.” PMX places great emphasis on value proposition, both its own and that of the advisors it partners with. “Everything one builds needs to be consistent with a value proposition. “ To conduct a risk-profiling exercise just to make the regulator happy adds little real benefit. However, if the purpose of a tool is real information for the advisor and to provide a client engagement and coaching tool, then this talks to value proposition.” That it leaves a regulator satisfied is a bonus, it seems. Brandon Zietsman Brandon has a busy life outside the office. Much of his youth was spent rock climbing, diving and flying gliders. He is a qualified field guide and yacht skipper, has a passion for South African history, loves the bush and recently completed a professional photography course. He is an avid cyclist and occasional, reluctant runner. Brandon spent the last year and a bit learning Swedish and is happiest fishing offshore from his kayak or tinkering in his astronomical observatory at home. Brandon is married to Inge, a clinical microbiologist, and has two sons, Michael and Ryan. The family is happy to call Jozi home! Integration Many toolkits are available to address willingness and ability to take risk, capacity for loss and a host of business efficiency tools. In Roberts’ view, the edge lies in integration. “In the UK, especially, it is quite common for an advisor to purchase a third-party cash flow modelling package from one vendor, a risk-profiler from yet another, while outsourcing investment management to an unrelated DFM. “There is no connection whatsoever between the underlying assumptions of each party and the outputs can often end up misaligned. Yet the regulator has made it clear that the responsibility for ‘calibrating’ these different tools to portfolios lies with the advisor.” At PMX, the integration work is done in-house, and assumptions are aligned. PMX – quo vadis? For an innovative company, the obvious question is where to from here? Zietsman says, “We don’t believe in innovation for innovation’s sake. We will obviously continue to refine and improve our proposition and a key strategic objective is to drive our expansion in Europe and get a presence in the US in 2020, where Mike Roberts will be relocating. In SA, we are very excited about our offshore proposition, having recently launched a range of UCITS funds in Dublin, which carry on from where our offshore models left off. They are S65 approved and on all the mainstream offshore platforms available in SA. They are different in that they are optimised specifically for SA investors to a global currency basket.” More than that, we have an amazing team culture and a vibrant community that includes our IFA partners. If we can hold on to and nurture that, we will consider the business a great success. Brandon Zietsman Tel: +27 11 568 3400 Email: info@portfoliometrix.co.za www.portfoliometrix.com South Africa United Kingdom Sweden Ireland www.bluechipjournal.co.za 21
