What We Do
Today’s investment landscape is complex and difficult to navigate. The number of funds and asset classes to invest in continues to grow, regulations are frequently changing, and client expectations are constantly shifting. This makes it necessary to seek advice and support from experienced investment consultants.
A 20-year track record of performance excellence has distinguished us as one of South Africa’s leading independent asset advisory firms. Our talented team of investment professional partners with institutional clients to craft bespoke investment solutions specific to the investment needs and risk appetite of the clients.
We provide institutional investors with implemented consulting services across a range of asset classes. Our implemented consulting function provides specialist support throughout the investment process, from the initial advisory stage through to execution and ongoing monitoring. We also help guide asset allocation decisions through our asset consulting services, as well as provide effective management of these assets using our proven asset management capabilities.
With us, institutional investors benefit from an all-encompassing investment offering, including world-class research administration systems, appropriate yet innovative portfolio construction techniques, and timeous implementation of investment decisions. We offer institutional investors peace of mind by understanding their needs and advising them accordingly. We ensure that investors understand the risks associated with different investment options and thereby alleviate the pressures associated with making difficult investment decisions. Our depth and breadth of experience allow us to provide tailored advice to help investors achieve their objectives.
Implemented Investment Consulting
Our implemented investment consulting solution provides consistent support that extends all the way through the investment process – from the initial advisory stage to execution and ongoing monitoring.
Our model is based on identifying, implementing and actively managing the client’s portfolios. This is done via active asset allocation, manager selection and ongoing risk management.
We believe this approach ensures that objectives are consistently achieved with acceptable risk. We use strong research and administration systems which allow us timeous implementation of investment decisions.
This combination ensures that investors benefit from innovative and proper portfolio construction techniques and solutions.
Our Investment Consulting Services
Asset Liability Modelling & Investment Strategy Formulation
Because each client has a unique liability profile, we model assets and liabilities simultaneously as we do not believe that these should be considered in isolation.
The first step of our asset liability modelling is to determine the appropriate risk or investment objectives for each client.
The second step is the development of an appropriate long-term investment strategy based on the risk and investment objectives identified in the first step.
We assist clients with the formulation of each portfolio’s strategic asset allocation - that is, the percentage of the portfolio that should be invested in different asset classes over the long-term to achieve the desired investment objectives with the lowest amount of risk.
Our Investment strategies consider both traditional and non-traditional asset classes, which include but are not limited to Hedge Funds, Private Equity, Mezzanine Debt, Unlisted Debt, Unlisted Infrastructure, Unlisted Property, African Unlisted Property, SRI Investments, Emerging Markets, Protected Equity and Currency Hedges.
We believe that non-traditional asset classes can play a major role in any investment strategy and have benefited our clients, especially in the recent low return environment that has characterised traditional asset classes.
Tactical Asset Allocation
We believe that asset allocation is of the utmost importance and the key driver of a portfolio’s return, rather than stock picking within each asset class.
Tactical asset allocation is where deviations are made away from the strategic asset allocation to enhance total performance from specific asset classes.
All asset classes become significantly mispriced at one time or another and, with this in mind, we believe every fund’s strategy should have some sort of tactical asset allocation.
Our approach to TAA involves taking a medium-term view, and we do not try to time the market over the short-term.
Achieving consistent risk-adjusted returns on all our clients’ portfolios is integral to our investment philosophy.
Because no single fund manager can outperform consistently over the different phases of the market cycle, we construct portfolios by blending multiple specialist managers across various asset classes and investment styles with the aim of reducing volatility in returns throughout the cycle.
Achieving our client’s investment goals in a manner that is cost-efficient is also important to us. While we take an active management approach, we may complement this with passive investment strategies that reduce costs, while still meeting our client’s investment objectives and earning stable, consistent returns over time.
Market & Strategy Research
Research on the relative valuation of various investment assets and markets provides important input to the Novare House-view.
Our macro research process combines detailed fundamental research with unique insights to ensure the optimal implementation of our tactical asset allocation framework. Novare’s tactical asset allocation framework uses both a quantitative and qualitative processes to focus on the following key macro-economic variables (GIPS):
- Policy, including fiscal and monetary policies
- Sentiment, including institutional and retail positioning within asset classes as well as technical sentiment factors
We also include a sentiment factor to capture behavioural finance influences. We study a number of underlying economic and market variables, which we believe influence these factors over various parts of the business cycle.
The factors above will influence our primary decisions on which asset classes to over- or under-weight and by how much. Within specific asset classes we also remain cognisant of asset class-specific micro drivers (for example, valuations, political influences and credit spreads) to form our final decision on our houseview position.
To further inform our views we have partnered with two world leading macro research firms. Our South African focussed partner is one of the oldest independent economic research institutes in the country having been established in 1944. They have built a reputation for independent, objective and authoritative economic research and forecasting focusing primarily on the South African macro economy.
Our global partner is an independent global macro research firm that focuses on top-down analysis of major secular and cyclical trends in the global economy and financial markets, providing forecasts on major moves in asset prices and recommendations on asset allocation and investment strategy. They ignore the daily noise of news and the deluge of sell-side and other short-term research to focus squarely on cyclical and secular trends in the world economy, and the evolving conditions that drive financial markets.
Implementation, Reporting & Risk Management
This division is responsible for performance and risk calculation, monitoring, reporting, investment administration and implementation of fund strategies.
We use an internationally recognised system for our reporting. All client reporting is built up from underlying holding reports, asset class exposures, market values, investment managers and also includes a detailed market overview summary. The report can include performance as well as risk statistics which are customisable to each client’s needs.
Market feedback is given on a weekly basis using our “The Week That Was” communication. This is supported by a monthly overview and an in-depth quarterly economic publication. Topical economic research reports are undertaken as the market environment requires them. We produce ad hoc reports on issues of interest to clients on an on-going basis.
General Management & Compliance
This support division is responsible for marketing, finance, compliance, office management and legal support.
We have a compliance department which handles all compliance matters independently from the client servicing team and also provides legal support on mandates and the legal and regulatory environment.
We assist clients with the implementation of new mandates or the rebalancing of large assets in a cost-efficient manner.
Out of the market and market impact costs, amongst others. These include the management of cashflows and scrip transfers between managers where no brokers are involved.
In addition, we can provide full transition management services with physical trading and settlement of shares, including a pre-trade and post trade transition report detailing trading costs, risk analysis, the transition plan, transition values, performance summary, transition costs and a summary of asset changes.
Dedicated Administration Team
We have a dedicated investment administration team providing risk management and reporting, unit pricing and Regulation 28 compliance monitoring services.
In terms of Regulation 28 compliance monitoring, we can provide this on a monthly or quarterly basis with the full Schedule IB report of all instruments that the fund holds, limits and any breaches. We also provide a summary Schedule IB report and a breach report.
In terms of unit pricing, we can provide monthly unitisation of investment portfolios.
These services are also available on a stand-alone basis. Our investment administration platform is provided by our sister company Novare Capital and is one of the most reliable systems in the country.