Risk-Rated Portfolio Solutions Agenda Agenda Introduction 1. o - - PowerPoint PPT Presentation
RI RIVE VERS RS CA CAPIT ITAL AL MANA NAGEMENT GEMENT Risk-Rated Portfolio Solutions Agenda Agenda Introduction 1. o The Rivers Approach to Investment o Working with Advisors The Investment Process 2. o Risk Rated Growth or Income
1.
Introduction
2.
The Investment Process
3.
Key Biographies
Agenda
2
committee of industry experts
“Dedicated to discretionary portfolio management Rivers will never provide financial planning or individual wealth management. Our ideal client is an advisor who fully understands what we’re doing and why we are doing it, we don’t do surprises. We want clients who communicate with us as a partner, a partner who is independent and can therefore be objectively assessed…” Richard Bonnor-Moris - Citywire
3
Introduction
“Ever erythin hing should ld be made ade as simp mple le as possible sible, , but not
mpler ler” - Albert Einstein “Honest esty is the best st policy icy – when en there is money in it.” – Mark Twain
4
Introduction
“You can’t do the same things others do and expect to outperform” – Howard Marks “Pric ice e is what at you pay, , Value lue is what at you get et” – Warren Buffet
5
Introduction
Investment Process
assessed Rivers Portfolio Solutions
to specific client needs
and independent advisor 6
information
advisor queries
investment management service for advisors
solutions for financial advisors’ needs
Financi ncial l Ad Advisor sor Individ vidual ual Client nt
Investment Process
Risk Rated Growth th or Incom
e Focused ed Po Portfolios
Tactic ical al Adjus ustme tment nt Fund d Selec ection ion Po Portfolio
versight ight & Complianc liance 7 Using proprietary risk model all portfolios start with a strategic asset allocation which will primarily determine portfolio characteristics Tactical adjustment to adjust risk, avoid expensive assets and alter the active/passive allocation depending on the market cycle Rivers meet with all active investment managers and take advantage of robust third party and internal research to maximize
Consistency of return and the avoidance of loss remain the primary objective. Independent compliance overview ensures regulatory risk is avoided
premia and the covariance and correlation between assets
risk appear to remain consistent over long investment periods
investment
The Investment Process
Time Market ket Value Actual Market et Value Full Cycle e 5-10 Years rs
“The long term differs from all time periods apart from the long term”
8
return assets – the Anchors
with expected long term high returns - the Enhancers
diversifying assets to lower the overall portfolio return volatility - the Diversifiers
The Investment Process
ANCHORS RISK RETURN
9
The Investment Process
The oversold and the unpopular Active management at the end and beginning of the market cycle Interesting themes prior to them making headlines Underperforming managers with excellent long term records Uncorrelated funds when sentiment is excessively optimistic Risk when sentiment is fearful The overbought and the most popular Active management if breadth and leadership is narrow Headline making assets that are likely to form bubbles Managers with unjustifiably strong returns Assets where liquidity is concerning Risk when sentiment is excessively
Some examples that justify reallocation of capital We rebalance portfolios according to on-going market conditions
10
performance of active fund managers against a wide range of investment benchmarks.
perform despite rising concern from investors.
investments needs to be dynamic and depends on the ongoing market cycle.
perform most effectively at the beginning and during the first half of a market cycle.
allocation increases efficiency and reduces overall costs to clients.
maximum allocation to active management for any portfolio.
11
10 20 30 40 50 60
5 10 15 20 98 00 02 04 06 08 10 12 14
Investment Date
1 Year MSCI World Performance (GBP)
Source: Financial Express –. Shows the aggregate excess return of high tracking error equity and fixed income funds since Q1 1998. High Tracking error for this purpose is
calculated from funds own listed benchmark. This data is for illustrative purposes and was prepared by Rivers Capital Management. Funds were restricted to those currently available on Ascentric and therefore subject to survival bias
The Investment Process
The Investment Process
12
Anchor Enhancer Diversifier Aggressive position Defensive position Neutral
Valuations low, Risk is cheap
Passive (20-60%) Active (40-80%) Distorted market, Valuations high Neutral
The Investment Process
13
Anch chor
Activ ive 15% 15% Anch chor
Passiv ive 15% 15% Enhanc ncer er Active 22% 22% Enhanc ncer er Pass ssiv ive 22% 22% Diver ersif ifier ier Activ ive 13% 13% Diver ersif ifier ier Passiv ive 13% 13%
Balanced Portfolio Allocation - 3B 3B
All active fund managers selected have met and been approved by the Rivers Investment Team At least 80% of active funds we choose are rated
independent research The ability to generate return is not related to fund size. Rivers considers all funds not just the largest Closed-Ended funds and ETFs can be excellent but are only appropriate for some platforms Passives are selected with low tracking error to a relevant benchmark Rivers is independent and does not manage single strategy in house funds Due diligence from the platforms, independent and Rivers’ research ensure only high quality regulated fund solutions are considered
Example Balanced Portfolio allocation November 16 “3B” relates to Slight Underweight (3) Risk allocation with a Overweight (C) Active/Passive allocation
Rivers will optimise portfolio construction based on availability to individual platforms and is not restricted to funds available to all
Example Portfolio
14
Ancho chor Activ ive 13% 13% Anch chor
Passiv ive 16% 16% Enhanc ncer er Active 21% 21% Enhanc ncer er Passiv ive 24% 24% Diver ersif sifier ier Activ ive 16% 16% Diver ersif ifier ier Passiv ive 10% 10%
November 201 016 Balanced Portfolio Allocation - 3B 3B
Anchor Active 13.0% Kames - Absolute Return Bond C Acc GBP 8.0% TwentyFour - Monument Bond I Net Acc GBP 5.0% Anchor Passive 16.0% BlackRock - Cash D Acc 5.0% BlackRock - UK Gilts All Stocks Tracker D Acc 4.0% Vanguard - UK Inflation Linked Gilt Index Acc 7.0% Diversifier Active 16.0% Jul Baer - RobecoSAM Smart Materials Na GBP 2.0% Newton - Real Return Inst W Acc 9.0% TM Fulcrum - TM Fulcrum Diversified Absolute Return C Acc 5.0% Diversifier Passive 10.0% BlackRock - Global Property Securities Equity Tracker D Acc 7.0% DB - Physical Gold 3.0% Enhancer Active 21.0% Ardevora - Global Equity C 6.0% Carmignac - Portfolio Emerging Discovery F GBP Acc Hdg 3.0% Franklin - India W Acc GBP 3.0% JPM - Europe Dynamic Ex UK C Hedged Acc GBP 5.0% NB - Short Duration High Yield Bond Inst Inc GBP 4.0% Enhancer Passive 24.0% Allianz - Best Styles Global AC Equity C Acc 8.0% BlackRock - UK Equity Tracker D Acc 3.0% Fidelity - Index Europe ex UK W 4.0% HSBC - American Index C Acc 6.0% iShares - £ Corporate Bond 1-5yr UCITS ETF GBP 3.0%
Some asset classes have more passive alternatives available so the portfolio construction process allows flexibility between different asset classes provided the
Passive Allocation = 50%; Overall OCF of underlying est. 0.56%
The Investment Process
15
Biographies
16
Richard Bonnor-Moris
Richard is CEO and Portfolio Manager at Rivers Capital Management. Richard was previously head of Multi- Asset Solutions at Newscape Capital Group. Richard has over 20 years of asset management experience, with a focus on portfolio construction and manager selection. After initial work with institutional investors and high net worth clients, Richard began managing retail model portfolios reflecting regulatory changes that started in 2009. Prior to joining Newscape, Richard was a Senior Advisor at Nemesis Asset Management with responsibility for its Multi-Family Office business. Before that he was an Executive Director at Lehman Brothers Asset Management within the Strategic Partnerships team, a Vice President at JPMorgan Private Bank and an Associate at the quant focused currency overlay specialist Pareto Asset Managers. Richard has an Executive MBA from London University and a BA in Economics from Manchester University.
Key Biographies
17
Eduardo Tomacelli
Eduardo is Chairman and Portfolio Manager at Rivers Capital Management. Eduardo has 30 years’ experience in global equity investing, having been a director and portfolio manager at Mariner Capital, Sagitta Asset Management and prior to that, responsible for over £1.5bln at Mercury Asset Management. Eduardo has launched and managed both long only and long/short equity strategies since 1987 and has managed equity portfolios for institutional pension funds, unit trusts, charities, SICAVs and UCITS. Eduardo sits on the Rivers asset allocation committee and provides tactical asset allocation advice to the multi-asset portfolio managers.
Key Biographies
18
Najib El-Rayyes Najib has 18 years’ experience in fund management managing both long-only portfolios and systematic hedge fund strategies. Prior to joining Rivers, Najib worked at Newscape Capital Group co-managing a US long-only fund and an Emerging Markets value fund. Formerly, he was a partner and portfolio manager at Mariner Capital, co-managing a long/short and market neutral hedge fund using proprietary quantitative models as well as a US equity long only fund. Prior to that, he managed a technology and biotech portfolio at Sagitta Asset Management..
Key Biographies
19
Contact
20
Financial Conduct Authority (FCA). Its registered offices are at 1 Berkeley Street, London W1J 8DJ United Kingdom. This presentation is intended only for use by Financial Advisors and not for distribution to retail investors. This document does not constitute professional advice, or an offer, or a solicitation of an offer, to sell securities and no securities are to be offered
investments (as principal or agent) for the purposes of their businesses, or otherwise in circumstances which have not resulted and will not result in an offer to the public within the meaning of the Financial Services and Markets Act 2000. The Model Portfolio is not suitable for all types of investors and investor accounts may only be attached to it by the instruction
currency movements may cause the value of investments and the income from them to fall as well as rise. Unless otherwise stated, the source of all figures contained herein is Rivers Capital Management. Whilst all reasonable care has been taken in preparing this presentation, the information contained herein has been obtained from sources that we consider reliable but we do not represent that it is complete or accurate and it should not be relied upon as such.