Toby Vaughan Head of Fund Management Global Multi-Asset Solutions (GMAS) Solutions Designed for the Discerning Adviser.

Transcription

1 Toby Vaughan Head of Fund Management Global Multi-Asset Solutions (GMAS) Solutions Designed for the Discerning Adviser September 2014

2 Content About Santander Asset Management Global Multi Asset Solutions (GMAS) introduction Our proposition Key points Portfolio Design Investment process Conclusion Appendix 2

3 About Santander Asset Management - Experience you can trust 127bn* bn Total AUM globally Investment professionals globally Santander Asset Management countries across Europe and Latin America Total AUM in Santander Asset Management UK 560,000 Clients invested with Santander Asset Management UK Santander Asset Management UK recipient of the Gold Standard Award five years in a row 3 All facts and figures correct as at end of March * Exchange rate: 1 = 1.21.

4 Global Multi Asset Solutions (GMAS) introduction Multi award winning department 19 investment professionals Wide range of investment portfolios across numerous jurisdictions 13 billion+ Assets under management 20 billion+ Assets under influence Structured and robust investment process Strong risk discipline Reputation for investment solution provision 4

5 Global Multi Asset Solutions (GMAS) meet the team Global Multi Asset Solutions Tom Caddick Head of Global Multi Asset Solutions Manager Research & Selection Jose Maria Martinez Sanjuan, CAIA Head of Manager Research & Selection Jose Lopez Mayer, CFA Research Analyst Eduardo Sanchez Alonso, CFA Research Analyst Gabriel Simon Research Analyst Dan Piquet, CFA Research Analyst Marta Perez Cogollos Research Analyst Santiago Vidal Research Analyst Peter Murphy Research Analyst Fund Management Toby Vaughan, CFA Head of Fund Management Marta Bretones Fund Manager Vasileios Kocheilas Fund Manager (Alts) Nikhil Mehra Fund Manager Renzo Desbordes, CFA Portfolio Strategist Ignacio Barreras Portfolio Analyst Helen Llorente Portfolio Analyst Investment Solutions Cristina Rodriguez Iza, CFA Head of Investment Solutions Stefan Hollidt, CFA Investment Specialist (Germany) Fernando Rivero Quantitative Analyst Dawn Coghan Investment Analyst 5

6 Our proposition Strategic Design Client objectives Robust Process Portfolio 3 Portfolio 4 Portfolio 5 Portfolio 6 Portfolio 7 Our Proposition Ongoing Support 6

7 Key points Five UK regulated portfolios managed within a specific volatility range over the long term Diversified and dynamically managed across asset classes and sectors An actively-managed solution through unfettered proposition with best in class investment managers Embedded risk governance framework with high level of transparency Dynamic asset allocation strategy with asset class strategy guiding manager selection Clear client outcomes provided by Moody s Analytics Ongoing charge capped at 0.99% with no entry or exit charges Risk profiled by Distribution Technology, Capita Synaptics and FinaMetrica 5 Diamond rating from Defaqto, Recommended Fund Range rating from Rayner Spencer Mills and Recommended rating from Square Mile 7

8 Client objectives Our Proposition Expected Retrun 5% Risk tolerance Portfolio 3 Portfolio 4 Portfolio 5 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Return Support Literature Time Horizon Mandatory Comms Strategic Design Portfolio 6 Ongoing Support Portfolio 7 Monitoring Framework Robust Process Top Down Strategy Strategy Strategic Design - Asset Allocation Strategic asset allocation work - objectives To produce attractive risk adjusted returns Range of portfolios operating within explicit volatility bands, targeted at different client needs Inputs analysis understanding the quantitative and qualitative factors for asset classes to assess suitability Quantitative combination of stress testing, risk budgeting and optimisation Qualitative Interpretation pragmatic overlay Portfolio 3 Portfolio 4 Portfolio 5 Portfolio 6 Portfolio 7 8

9 Client objectives Our Proposition Expected Retrun 5% Risk tolerance 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Portfolio 3 Return Support Literature Portfolio 4 Time Horizon Mandatory Comms Portfolio 5 Strategic Design Portfolio 6 Ongoing Support Portfolio 7 Monitoring Framework Robust Process Top Down Strategy Strategy Asset Allocation Strategy Dynamic strategy Strategic Review Annual review to ensure strategic mix remains appropriate Catalysts for change o o o Tactical Flexibility Governance Material shift in longer term asset class expectations (e.g. extreme valuations) Changing longer term correlation/ volatility environment Existing or new asset classes become more/ less investable Flexibility around central allocations to enable controlled active management Volatility Management Pre trade checks carried out to ensure adherence to volatility parameters Volatility management will override desired changes to ensure products remain within the risk band OCF management 9

10 Importance of a decision making framework 10

11 Client objectives Our Proposition Expected Retrun 5% Risk tolerance Portfolio 3 Portfolio 4 Portfolio 5 Portfolio 6 Portfolio 7 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Return Support Literature Time Horizon Mandatory Comms Strategic Design Ongoing Support Qualitative Interpretation Quantitative Robust Process GMAS Fund Management investment process Structured Investment Process Robust framework for decision making and control Sophisticated & Dynamic approach Continuous cycle of work with monthly meetings on all areas Focused resource Monitoring Framework Portfolio Level Fund/Holdings Level Model Review Other Risk sources Top Down Strategy TAA Product Risk Management Portfolio Construction Positioning Strategy Manager Selection Portfolio Construction Process Focused On The Drivers of Risk & Return 11

12 Equity Govt. Bonds EMD Credit Absolute Return Cash US Europe UK Japan Asia ex- Japan GEM US Govt. Europe Govt. UK Gilts EMD - Hard EMD - Local IG - US IG - Europe IG - UK HY - US HY - Europe Absolute Return Cash Client objectives Our Proposition Expected Retrun 5% Risk tolerance Portfolio 3 Return Portfolio 4 Time Horizon Portfolio 5 Strategic Design Portfolio 6 Portfolio 7 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Support Literature Mandatory Comms Ongoing Support Qualitative Interpretation Quantitative Robust Process Asset allocation Flexibility to position portfolios around long term strategic allocations Incorporate current views Reflect market conditions Max. 10% OW 0% -10% Max. UW 12 Equity Govt. Bonds EMD Credit Absolute Return Cash

13 Client objectives Our Proposition Expected Retrun 5% Risk tolerance Portfolio 3 Portfolio 4 Portfolio 5 Portfolio 6 Portfolio 7 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Return Support Literature Time Horizon Mandatory Comms Strategic Design Ongoing Support Qualitative Interpretation Quantitative Robust Process Asset class strategy The investment strategy to access an asset class Tailored to each asset class Provides focus to the manager selection process Certain decisions/ strategies taken across all asset classes Active risk strategy Manager/ vehicle specific considerations Others will be more asset class specific Equity Style, Market cap Fixed Interest duration, capital structure, issuance Absolute Return strategy, risk management 13

14 Client objectives Our Proposition Expected Retrun 5% Risk tolerance Portfolio 3 Portfolio 4 Portfolio 5 Strategic Design Portfolio 6 Portfolio 7 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Return Support Literature Time Horizon Mandatory Comms Ongoing Support Qualitative Interpretation Quantitative Robust Process Manager selection Key Components to the GMAS Process 1. Quantitative Rigour 2. Intensive Due Diligence Process 3. On-going monitoring 4. Portfolio Construction Discipline 5. Department Expertise Size Investment professionals Global/local Transparency AM Company Investment Process Track record consistency Sustainability Integrity Manager Universe Quantitative Screen Team turnover Experience Tenure Resources Manager Risk Control Capabilities Diversification Risk control tools Qualitative Due Diligence Manager Matrix 14

15 Client objectives Our Proposition Expected Retrun 5% Risk tolerance Portfolio 3 Portfolio 4 Portfolio 5 Strategic Design Portfolio 6 Portfolio 7 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Return Support Literature Time Horizon Mandatory Comms Ongoing Support Qualitative Interpretation Quantitative Robust Process Monitoring & controls Governance at multiple levels Portfolio Risk & Performance Monitoring Manager & Fund Review Meeting Control Forum Portfolio Modelling Meetings General Process Meetings Engagement with External Managers 15

16 Client objectives Our Proposition Expected Retrun 5% Risk tolerance Portfolio 3 Return Portfolio 4 Time Horizon Portfolio 5 Strategic Design Portfolio 6 0% 5% 8% 10% 1 15% 18% Expected Volatility Ongoing Support Portfolio 7 Monitoring Framework Qualitative Interpretation Quantitative Robust Process Top Down Strategy Strategy Ongoing support We support you with: Clear client outcomes and investment journey with potential ups and downs (by Moody s Analytics) Quarterly reports to keep your clients informed on: o o o market and fund activity, full portfolio breakdown, performance and expected outcomes information A comprehensive Due Diligence report that fully outlines our investment governance, processes and practices Our Guide to Investment Risk Cost transparency documents, such as our Guide to Fees and Charges 16

17 Client objectives Our Proposition Expected Retrun 5% Risk tolerance 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Portfolio 3 Return Support Literature Portfolio 4 Time Horizon Mandatory Comms Portfolio 5 Strategic Design Portfolio 6 Ongoing Support Portfolio 7 Monitoring Framework Qualitative Interpretation Quantitative Robust Process Top Down Strategy Strategy Santander Portfolios - a risk targeted range STRATEGIC ASSET ALLOCATION Santander Portfolios have the following strategic asset allocations. 5% 5% 20% 10% 10% 10% 5% 40% 60% 7% % % 47% 80% 95% Equities Alternative Fixed Income Cash The Santander range has been independently reviewed and profiled by Distribution Technology (DT) to the risk profiles used on DT s Dynamic Planner. FinaMetrica has also risk profiled the range and had mapped its risk tolerance scores to the five Santander Portfolios. Finally, the Santander Portfolios are also independently risk profiled by the Capita Synaptics Risk Rating Service, which is derived from the risk framework provided by Moody s. 17

18 Client objectives Our Proposition Expected Retrun 5% Risk tolerance Portfolio 3 Portfolio 4 Portfolio 5 Strategic Design Portfolio 6 Portfolio 7 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Return Support Literature Time Horizon Mandatory Comms Ongoing Support Monitoring Framework Qualitative Interpretation Quantitative Robust Process Top Down Strategy Strategy Santander Portfolios volatility range Each portfolio has a clear (annualised) volatility target and a corridor We look at longer term volatility (20 years) shorter term volatility can lead to more aggressive swings in asset allocation and can potentially drive unwanted exposure to risky asset classes at the wrong time The target level of volatility for each portfolio is shown below: PORTFOLIO LOWER (%) TARGET (%) HIGHER (%) Santander Portfolio Santander Portfolio Santander Portfolio Santander Portfolio Santander Portfolio

19 Client objectives Our Proposition Expected Retrun 5% Risk tolerance Portfolio 3 Portfolio 4 Portfolio 5 Strategic Design Portfolio 6 Portfolio 7 0% 5% 8% 10% 1 15% 18% Expected Volatility Ratings & Engagement Return Support Literature Time Horizon Mandatory Comms Ongoing Support Monitoring Framework Qualitative Interpretation Quantitative Robust Process Top Down Strategy Strategy Summary An experienced and well resourced investment team Five UK regulated portfolios managed within a specific volatility range over the long term Diversified and dynamically managed across asset classes and sectors Independently risk profiled by DT, FinaMetrica and Capita Synaptics Ongoing charge capped at 0.99% with no entry or exit charges Investment integrity through unfettered proposition with best in class investment managers A robust, consistent and repeatable investment process 19

20 Appendix 20

21 Global Multi Asset Solutions design process Risk Profile Portfolio/Cli ent Objectives Attitude to risk Return requirements Time horizon Liquidity needs Pragmatic Optimisation Asset Class Correlation matrix Regulatory & legal considerations Liquidity match Volatility & return assessment Practical Overlay Portfolio Design Quantitative analysis Iterative approach Qualitative overlay Pragmatic & appropriate outcomes Optimisati on Optimisati on Stress Test Return Distribution Volatility Hit Rate 21

22 GMAS Fund Management investment process Asset Allocation - Matrix Monitoring Framework Portfolio Level Fund/Holdings Level Model Review Other Risk sources Top Down Strategy Tactical Asset Allocation Product Risk Management Portfolio Construction Positioning Strategy Manager Selection Portfolio Construction Strategy - Process Cycle Monitoring & Review Idea Generation Investment Universe Portfolio Construction Research & Evaluation Asset Allocation - Model Portfolio Position Sizing & Risk Manager Research Manager Universe Quantitative Screen Qualitative Due Diligence 22

23 Global Multi Asset Solutions manager research process Absolute & Relative Returns Objective: Compare funds to their peers in terms of absolute return or relative to a benchmark. Risk/Return Metrics Consistency Objective: Identify funds that make an optimal use Objective: Identify funds that over different periods have often produced returns consistent with the top rankings of performance in the peer group. of risk to produce attractive returns Manager Universe Quantitative Screen Qualitative Due Diligence Manager Universe AM Company Valuation Based on transparency, service, information quality, etc. Size Investment professionals Global/local Transparency AM Company Investment Process Track record consistency Sustainability Integrity Quantitative Screen Due Diligence Investment Process, Org, Risk Management, etc. Team turnover Experience Risk Control Qualitative Fund Due Made by the asset class analyst after Manager Tenure Risk control tools Diligence meeting the manager team Valuation Resources 23 Manager Capabilities Diversification

24 Ongoing support - investor outcomes We have engaged with Moody s Analytics to help us outline the possible outcomes This is vital to help translate the volatility story We update this brochure quarterly Available on our website As an example, we show the potential profit and potential annualised returns for Portfolio 3 24 Source: Moody s Analytics as at December Please be aware that these projections are not a reliable indicator of future performance.

25 Ongoing support - quarterly update We provide you and your clients a quarterly update Market update & performance Market outlook and outlook by asset class Portfolio activity in the previous 3 months Tactical asset allocation Geographical breakdown Commentaries Performance figures Full list of holdings 25

26 Ongoing support - due diligence We also provide you with our Due Diligence report 40 pages long explaining each aspect in detail We provide you with recommendation paragraphs for your reason why or suitability letters 26

27 Ongoing support - cost effective risk targeted solutions We are committed to being open and transparent, and disclosing all charges and costs for investing. 27

28 Q & A You can us any questions or feedback to Intermediary.Enquiries@santanderam.co.uk Santander Asset Management UK Limited (Company Registration No. SC106669) is registered in Scotland at 287 St Vincent Street, Glasgow G2 5NB, United Kingdom. Santander Asset Management is authorised and regulated by the Financial Conduct Authority. FCA registered number Telephone Calls may be recorded or monitored. Santander and the flame logo are registered trademarks. 28