Investment policy statements provide a vital
framework for investment decisions.
Which is why Selekane consultants work with clients to evaluate and
prioritise their investment objectives, and develop a strategy that maximises
the probability of achieving these objectives.
An investment policy statement is formulated
detailing the guidelines by which the fund’s investments must be planned and
supervised. This statement is kept flexible, allowing the trustees to make
changes as and when necessary.
While it is important to select the right
investment manager, it is also vital to ensure that the manager is following an
investment strategy suitable for the fund and its liability profile. At Selekane
we utilise the industry’s leading asset liability investment model to analyse
how a fund’s assets and liabilities will jointly behave, with varying asset
mixes, under different economic scenarios. We are then able to produce a mix of
assets referred to as the strategic asset allocation, appropriate to the
specific liabilities of the fund and stated objectives. This is key, as research
reveals that asset allocation contributes over 90% to the variability of
returns.
Throughout this process, our consultants work
closely with the funds' actuary as well as the Trustees. They provide a detailed
explanation of the investment vehicles available and their associated risks, as
as well as information on the expected return levels,
risk and taxation (where applicable) of individual asset classes, and details of
legislative requirements and restrictions.
At Selekane, asset manager research is a core
activity, which is why we maintain a comprehensive database of investment
managers for a wide range of institutional mandates and products. Our investment
manager research, due diligence, and selection process utilises several layers
of quantitative and qualitative screens to identify managers most likely to
perform well in future.
Independent risk, performance and compliance
monitoring is crucial for unbiased analysis of the performance of the fund as
well as that of investment managers. We pay particular attention to risk rather
than past performance to ensure that trustees know what lies ahead as opposed to
what has happened in the past. We focus on analysing the actual assets (domestic
or international) that managers buy into their portfolios rather than the
aggregate returns that have been achieved. This allows for the proper
understanding of risk associated with each asset in the portfolio.
In order for trustees to be confident that they
are making the right decisions, they need to have a thorough understanding of
the tasks that they are delegating. Selekane offers comprehensive training
programmes to trustees covering a diverse range of topics. These include the
principles of investing, risk management, investment strategy formulation and
monitoring, and asset manager and product selection. This training helps
trustees to make confident, fully-informed decisions when it comes to managing
their fund’s assets.
Selekane offers member education programmes that
are tailored for each fund. These enable members to have a full understanding of
the implications of their fund selections and the risks of the various asset
classes in which they may choose to invest. Our member communication services
include: preparing detailed fact sheets on each of the fund options (including
structure, risk, suitability and performance), investment newsletters for
members and regular performance updates.
In the event that trustees decide to change
the investment strategy and replace an investment manager, the transitioning of
assets to a new manager poses a challenge given the number of parties involved.
Selekane assists trustees with the appointment and acts as a liaison with the
appointed transition manager to ensure that the transfer is carried out in a
cost-effective and timely manner. |
