Q.What is the basic approach to managing the fund?
The investment team has flexibility to find the most appropriate low risk investments, not restricted to one investment type or asset class, but with a strong focus on suitable covenants, legal protection and downside protection on investments to enable accurate risk modelling. The resulting portfolio has a high level of diversification by asset class, sectors and underlying holdings.
The investment process starts with top-down analysis, including the political stability of different geographical regions and sovereign strength. The team drill down further into the sectors and assets where they believe there is a good potential for a re-rating. The focus is then on searching for a low risk access to the preferred sectors and asset classes. If the team cannot uncover what they believe is a low risk investment route into a specific sector or asset, then they do not invest. This means the majority of investments in the portfolio have a predictable profile regardless of the risk profile of the underlying exposure, and typically exhibit key characteristics of a fixed life, fixed entitlement or both, enabling accurate risk modelling.
Q.How does the fund maintain its low volatility?
The majority of investments in the portfolio have a predictable profile regardless of the risk profile of the underlying exposure, and typically exhibit key characteristics of a fixed life, fixed entitlement or both, enabling accurate risk modelling.
Q.Are there any particular market conditions that suit your fund?
We model the Fund with the objective of delivering an absolute return in all market conditions over a rolling twelve month period. Changing market conditions create opportunities to add value by switching between the different investment types utilised.
Q.What strategies have been the most successful and unsuccessful over the past twelve months?
The Fund does not pursue outright strategies but a number of underlying exposures have performed well during the last year including exposures to utilities, private equity, property and small cap equities. As underlying exposures are re-rated we are continuously looking to realize gains and reinvest into sectors and asset classes where we believe greater value exists.
Q.What are the main challenges which will be faced by the fund in the next one to two years?
Underlying sectors, assets and investment types are continuously changing as are the risks faced. We model the Fund with the objective of delivering an absolute return in all market conditions over a rolling twelve month period.
