OLD MUTUAL WEALTH’S
INVESTMENT DIVISION
FUND RESEARCH TEAM
For financial advisers only
FUND RESEARCH TEAM
The investment fund research team at Old Mutual Wealth’s Investment Division
performs two crucial tasks: finding the best fund managers from across the world,
and conducting rigorous ongoing due diligence on fund managers already entrusted
by the Investment Division and Old Mutual International.
In doing so, the research team plays a crucial role in
supporting each of the component parts of the Investment
Division – Old Mutual Global Investors (OMGI) and
Quilter Cheviot – whose funds and services can be accessed
through Old Mutual International’s products.
ETHOS
TEAM STRUCTURE
The eight-strong team of analysts is headed by Nick Wood, who has
19 years’ experience in the financial services industry. The rest of the
team have a similarly strong background, with an average of more
than 14 years’ industry experience.
This level of experience enables the team to conduct in-depth due
diligence effectively, challenging fund managers’ decisions and
investment rationale. In order to do this, the team members must also
keep up to date of the macroeconomic and geopolitical events that
drive financial markets.
The team’s extensive network of industry contacts results in a constant
flow of information about new managers – and opportunities for
research – passing over to the team. Coverage of geographic regions
and asset classes is divided among the team members, enabling the
team to field specialists across equities, fixed income, real estate – as
well as alternative investments such as infrastructure, hedge funds and
private equity.
Dedication, specialism and collaboration are the core principles
that underpin the team’s approach to research. And at the heart of
everything it does is the question: does this manager have the ability
to add value, or alpha, over the long term? This requires rigorous
qualitative and quantitative analysis of a fund manager’s investment
process and philosophy to ascertain whether they are repeatable –
far more than a simple ‘box-ticking’ exercise.
The team searches the globe for the best managers available, casting
its net as wide as possible and looking at funds from across the entire
market. By deploying its deep, specialist knowledge within asset
classes, it enables the portfolio managers in the Old Mutual Wealth
Investment Division to concentrate on their primary task – portfolio
construction and achieving the expected client outcomes.
INVESTMENT UNIVERSE
The Old Mutual Wealth’s Investment Division has a broad range of
requirements, for which it is able to invest in both open- and closedended funds, as well as segregated mandates. This results in a much
wider universe than the pure UCITS fund space, and reaches beyond
the traditional financial advisers and wealth managers.
As such, a vast range of investment strategies are available – from
US-based hedge funds to European private equity funds. In keeping
with its ethos, the team frequently conducts face-to-face meetings with
new fund managers.
Research suggests that many active managers fail to beat their
benchmarks over the long term in some asset classes, meaning
the average manager may not add value. The managers who do
outperform also contribute to the research information.
At the same time, value can be added in relation to passive
investments, through research in the underlying indices.
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PROCESS
TOOLS
Face-to-face meetings are key to the process of adding new
managers to the recommended investment universe, and monitoring
those already covered. This is made possible by virtue of the
considerable access to fund managers enjoyed by the team, in part
due to the amount of assets managed by the Old Mutual Wealth
Investment Division. Full access to fund managers on an ongoing
basis is especially useful when any issues arise; for example, a streak
of poor performance or the departure of a manager. As a result of
this, the analysts are often among the first people to hear of such
matters.
The team uses a number of analytical applications, proprietary tools
and models, when assessing the performance of current managers,
and screening for new ones. These include:
An exhaustive research process is undertaken before approving a
new fund for investment. While the research analysts typically have
several meetings with the fund management team, ongoing due
diligence is equally important. The team conducts regular meetings
and holds discussions with the fund managers to ensure the initial
rationale for holding the investment is still valid.
Preparation is of paramount importance ahead of manager meetings:
analysts scrutinise the fund manager’s current and historic holdings
– employing some of the quantitative tools and models described
opposite – to drill down into their successes and failures. This enables
the analysts to enter the meeting fully prepared for an in-depth
conversation.
Moreover, extensive preparation enables the analysts to set the
agenda in their contact with fund managers, meaning they enter
meetings with clearly defined goals. All this is in order to try and
avoid surprises later on, by learning when managers can be
expected to outperform or underperform the market. This approach
helps avoid the classic error of buying successful funds at the top and
selling them at the bottom.
• Performance analysis: This analyses a fund’s performance
in different market conditions, and at different points in the
business cycle
• T rade execution analysis: This isolates past trades and calculates
where value was added and/or detracted, giving the team an
understanding of the fund manager’s decision-making process
•A
ttribution analysis: This assesses the drivers of past performance,
such as contributions and detractions from sector, industry, stock
selection or country exposure
•H
oldings-based style analysis: This details exposure to various
styles and factors over time, such as value and growth, to identify
any change in style over time and ensure consistency with
philosophy and process
These tools are all made possible because fund managers provide
the team with access to real-time holdings data, which are particularly
useful for analysis of stock- and sector-level exposure. For example,
when the Volkswagen emissions scandal broke in 2015, the analysts
were able to ascertain immediately who, among the European
managers under coverage, held the carmaker. In addition, such data
enables ‘fund of fund’ analysis, whereby the team can evaluate how
a number of different managers would work alongside one another
in a composite portfolio. This enables the team to learn whether the
managers all adopt essentially the same type of investment process
or whether they are genuinely different. This allows the creation of
portfolios that can potentially generate more consistent returns.
Access to this data, in combination with analytical tools, also allows
the team to ensure that exposure to individual securities, sectors or
regions is of the desired size.
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Old Mutual International is the cross-border product provider of Old Mutual Wealth.
For more information about the tools and models used in the Compass Portfolios, available through
Old Mutual International Isle of Man and Old Mutual International Ireland products, please contact
your Area Sales Manager.
IMPORTANT INFORMATION
Investors should be aware that the value of investments, unit prices and income from units may fall as well as rise in
value and they may not get back the amount invested. Past performance is not a guide to future performance. Where
a fund invests in securities designated in a different currency to the funds or where an underlying fund is denominated
in a different currency, investments may rise and fall purely as a result of exchange rate fluctuations.
Old Mutual International does not provide investment advice. This material is provided for information purposes only
and should not be relied or acted on by the recipient, and is not a recommendation to buy, sell or hold a particular
investment.
In Hong Kong, for professional investors only.
www.oldmutualinternational.com
Calls may be monitored and recorded for training purposes and to avoid misunderstandings.
Old Mutual International Isle of Man Limited is registered in the Isle of Man under number 24916C. Registered and Head Office: King Edward Bay House, King Edward Road,
Onchan, Isle of Man, IM99 1NU, British Isles. Phone: +44 (0)1624 655 555 Fax: +44 (0)1624 611 715. Licensed by the Isle of Man Financial Services Authority.
Old Mutual International Isle of Man Limited is a member of the Association of International Life Offices. Old Mutual International is registered in the Isle of Man as a business
name of Old Mutual International Isle of Man Limited.
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E-mail: hongkong@ominternational.com
Authorised by the Insurance Authority of Hong Kong to carry on long term business. Old Mutual International Isle of Man Limited is registered in the Isle of Man under number
24916C. Registered and Head Office: King Edward Bay House, King Edward Road, Onchan, Isle of Man, IM99 1NU, British Isles. Phone: +44 (0)1624 655 555
Fax: +44 (0)1624 611 715. Licensed by the Isle of Man Financial Services Authority.
Old Mutual International Ireland Limited is regulated by the Central Bank of Ireland. Registered No 309649 Administration Centre for correspondence: King Edward Bay
House, King Edward Road, Onchan, Isle of Man, IM99 1NU Tel: +353(0)1 479 3900 Fax: +353(0)1 475 1020. Head Office Address: Iveagh Court, 6-8 Harcourt
Road, Dublin 2, Ireland. VAT number for Old Mutual International Ireland Limited is 6329649S.
Registered Office: Arthur Cox Building, Earlsfort Terrace, Dublin 2, Ireland. Old Mutual International is registered in Ireland as a business name of Old Mutual International
Ireland Limited.
SK12848/INT16-0419/July 2016