RealFin Capital Partners Global Multi-Asset Portfolio (GMAP)

Transcription

1 RealFin Capital Partners Global Multi-Asset Portfolio (GMAP)

2 RealCap Global Multi-Asset Portfolio GLOBAL Investing in assets anywhere in the world MULTI-ASSET Equities, bonds/cash, real estate, commodities & specialist PORTFOLIO Investor s own segregated account in Switzerland Managing your global balance sheet locally 2

3 Global The nonsense of home bias Why should a South African high net worth investor portfolio be constructed differently to an investor in another country? What makes South African investors so reluctant to move beyond our meager 1.4% of the global investment universe and start participating in the remaining 98.6% available to us? It is a much-researched phenomenon known as home bias and at RealCap we feel strongly that the vast majority of South African investors are poorly advised when it comes to the management of investment assets. Global balance sheet RealCap adopts a global balance sheet approach to investment management which dictates that besides those assets an investor needs to match any local based liabilities debt, lifestyle expenses the remaining growth assets need to be put to work on a global basis wherever the best risk-adjusted global opportunities present themselves. GLOBAL Investing in assets anywhere in the world 3

4 Multi-asset Multi-asset Investors need to have portfolios that are diversified beyond the typical equities and bonds and must include global real estate, commodities and specialist opportunities in order to generate alternative sources of return. Core-satellite RealCap s approach provides investors with a core foundation of strategic multi-asset holdings and a specialist satellite exposure which is designed to deliver Alpha outperformance relative to traditionalbenchmarks. Specialist opportunities Specialist investment opportunities do not necessarily fit within a typical asset class classification but are either designed to provide non-traditional sources of return not typically linked to markets or to provide significant outperformance relative to traditional asset returns. MULTI-ASSET Equities, bonds/cash, real estate, commodities & specialist 4

5 Portfolio Segregated account A segregated account is equivalent to a personal bank account. The account is opened in the name of the investor and the investor gives permission for the investment manager to transact on their behalf. The investor assets are never comingled with other investors as they are in a typical unit trust or fund structure. Swiss counterparty Our counterparty in Switzerland is Credit Suisse AG in Zurich. They provide personal investment accounts for our investors and a world class reporting and transactional platform. Further, in certain circumstances, should our investors wish they may acquire a private banking card linked to their segregated account. PORTFOLIO Investor s own segregated account in Switzerland 5

6 Portfolio make-up Core and satellite We split our portfolios into a core allocation and a satellite allocation with 75% of assets making up the core and 25% allocated to specialist satellite opportunities. Core allocation Within the core assets, we assign minimum and maximum allocations per asset class. The asset class constraints as well as the coresatellite allocation provide a disciplined framework for making investment decisions. Satellite allocation The specialised satellite opportunities have no asset class, geographic or sector restraints placed on them and we will invest in assets which provide non-traditional sources of return or in specific opportunities where we have a very high level of conviction. 6

7 Making the asset allocation decision Asset class allocations The determination of how much to allocate to a particular asset class or geographic region is made by the investment team. The team will consider a range of factors to determine a view on each asset class and geographic region regions, countries or sectors of interest are subject to an intensive analysis which ultimately leads to a score or level of conviction for the asset. This process is undertaken monthly. Business cycle Industrial production Retail sales Inventories Unemployment rate Economic conditions Investor sentiment Market conditions Interest rates Inflation GDP Current account Consumer confidence Leading indicators News flow Market levels Money flows Dividend yields PE ratios Market scorecard Discretionary view Team view 7

8 Investing the assets ETP and mutul fund managers Through our Swiss-based counter-party, we have access to the world s best ETPs and mutual funds. Primary allocation We select global mandate ETPs to fulfil the minimum allocations to our core asset classes ensuring 50% of the portfolio is always allocated to low-cost instruments. Secondary allocation We select mutual fund or ETP managers with focussed mandates to express a particular asset class or geographic view and move above our asset class minimums. Mutual funds are selected in specific instances where a localised (country) or specialised (sector) skill set is required which cannot be captured by passive exposure to an ETP. Specialist opportunities Within the satellite portion of the portfolio, we will invest directly in assets selected by RealCap or with specialist managers in order to provide non-traditional returns. 8

9 Manager and ETP selection Selection criteria There are numerous ETP and mutual fund managers available to us and we need to filter the investment universe appropriately. Filter process We use various quantitative and qualitative filters in order to create an ETP or mutual fund short-list for indepth review and study. From our mutual fund managers we are looking for strong, consistent, understandable returns backed by a defined process and awareness of risk control. ETP and mutual fund universe Asset class filter Geographic filter Performance filter Risk filter Due diligence The due diligence process encompasses a thorough review of the investment process, depth and tenure of the investment team, return and risk profile relative to peers and market, statutory information and an assessment of costs for our mutual fund managers and an analysis of benchmark, tracking error and liquidity profile for our ETP instruments. Due diligence 9

10 Portfolio construction & monitoring Portfolio construction We are very mindful of the role each investment plays in the portfolio. The majority of the core portfolio will consist of low-cost, efficient ETPs. We aim for not only asset class diversification, but also style diversification amongst the mutual fund managers. Some managers may have a very quantitative process while others are driven by fundamentals or macro factors. A blend is beneficial. Our use of ETPs reduces our overall manager risk. Monitoring The investment team meets formally on a monthly basis, but monitors the portfolio and market conditions daily. We are mindful to filter the noise of the daily market movements and focus on our investment objectives and time horizon. Rebalancing The portfolio is rebalanced on a quarterly basis unless uncharacteristic events unfold which require action. With regard to our mutual fund exposure, we want to give our selected managers sufficient time to deliver on their mandates and shy away from unnecessary portfolio transactions. Rebalancing Monitoring Asset allocation Portfolio construction ETP & manager selection 10

11 Senior investment team Steve Doidge Steve is the co-founder of the RealFin Group which oversees assets of ~USD1.2 billion/zar12 billion. The RealFin Group consists of Realtime Financial Solutions (Pty) Ltd, which focuses on providing consulting and investment structuring services to the South African institutional market, and RealFin Capital Partners (Pty) Ltd ( RealCap ), which focuses on specialised asset management. Steve is responsible for the strategic management of the RealFin Group and is a member of RealCap s investment management committee. He has 17 years industry experience and prior to founding the RealFin Group in August 2003 was a director of Barnard Jacobs Mellet. Prior to joining Barnard Jacobs Mellet, Steve was a part of the Investec Group. Steve holds the following qualifications: BCom, Advanced Taxation Certificate, MCom, MPhil. Furthermore, he is one of a very few number of South Africans who has gained the extremely sought-after and challenging CAIA (Chartered Alternative Investment Analyst) qualification which is considered the international academic benchmark for professionals within the alternative asset management arena. Tarryn Valle Tarryn is the Head of Investment Strategy at RealCap focusing on investment research, manager selection and portfolio construction. Prior to joining RealCap, Tarryn worked as an independent consultant to the hedge fund and Fund of Funds (FoF) industry in South Africa and London assisting with investment analysis, manager selection, asset allocation and portfolio construction. She has also developed proprietary cloud-based fund management software for the alternative fund management industry which is distributed internationally. Before working as a consultant, Tarryn worked with BDO Stoy Hayward Wealth Management in London and HSBC Securities in Cape Town. Tarryn graduated with a Bachelor of Science (Physics, Astrophysics) from the University of Cape Town in 1999 and a Bachelor of Commerce via the University of Cape Town s accelerated post-graduate program in Tarryn was awarded the CFA (Chartered Financial Analyst) designation in 2004 and the FRM (Financial Risk Manager) designation in

12 GMAP details Portfolio structure GMAP is managed on a segregated basis. That is, the investor s funds are not pooled but are distinctively administered on an individual basis with all investment holdings acquired by the investor directly. This ensures greater transparency and flexibility. Who should invest GMAP is suitable for an investor s growth assets investable assets that the investor does not require for matching liabilities in his/her country of residence. Minimum investment USD500,000 (five hundred thousand United States Dollars) or currency equivalent. Fees 1 Investment Amount (United States Dollars) Management Fee (per annum) Performance Fee 2 (only applicable to satellite portion) 0-2,500, % 20 % Leverage No leverage is employed. 2,500,001-5,000, % 20 % Redemption notice There is no lock-up period and investors may terminate their mandate on a quarterly basis (subject to 60 days notice). Portfolio currency United States Dollars. More than 5,000, % 20 % 1 All fees quoted exclude South African Value Added Tax (14%) and furthermore exclude third party broker s commission, and any third party s charges, government levy, stamp duty, withholding taxes (if any) and further charges of external settlement agents or custodian entities. 2 Applicable only to holdings designated as part of the satellite portfolio component and based.on a high watermark and a performance benchmark of US 12 month LIBOR. 12

13 Frequently asked questions investment related What return can I expect? We have a USD investment return target of 8-12% per annum over a rolling three year period. Our objective is to deliver capital preservation and growth in hard currency terms over a medium term time frame. We achieve this through our core-satellite approach which provides a blend of higher growth potential assets with more traditional investments. What is an ETP? An ETP (exchange traded product) is a term given to investment vehicles which typically passively track or represent a basket of securities or commodities. For example, an ETP which tracks the S&P 500 will contain all the underlying equities which make up the S&P 500 index. ETPs are low-cost and liquid instruments. At any given time the exposure an investor will have to ETPs within the total portfolio will exceed 50%. If you don t invest in unlisted assets how do you gain exposure to real estate and physical commodities? Our real estate exposure is obtained either via mutual funds which invest in listed Real Estate Investment Trusts (REITs) or ETPs which track a specific property index. As such we have real estate exposure without the limitations of actually owning physical property. With regard to physical commodities we utilise ETPs which give us liquid exposure to an underlying physical commodity. I currently invest in a South African brand name offshore unit trust what differentiates you? There are some domestic unit trusts that feed into offshore assets and our local managers have done very well, particularly during They offer a way to participate in predominantly developed market offshore equities. This is different to having a personal Swiss investment account and gaining access to the ETPs/managers globally across multiple asset classes. Furthermore, GMAP can cater for investments made from South Africa in Rands, investments from funds already offshore as well as via the foreign exchange allowance granted to natural person investors. Do you invest in unlisted assets? No. Our investment universe is limited to liquid ETPs, mutual funds and securities which are listed on recognised global exchanges. 13

14 Frequently asked questions fee related Do you charge a performance fee? We charge a performance fee only on the satellite portion of the portfolio. This is subject to a high water mark and is taken on positive gains in excess of our performance benchmark which is US 12 month LIBOR. No performance fee is charged on the core portion of the portfolio. The satellite portion can consist of investments managed by RealCap are you doubling up on fees? We do charge fees (management and performance) on satellite investments managed by RealCap. With regard to performance fees (not management fees) we will rebate any performance fees earned on a satellite RealFin Group product against performance fees for the satellite portion of GMAP so as not to double up. The RealFin Group is considered a market leader in the structuring and management of speciliast investment opportunities and an investor automatically benefits from such opportunities which have typically been exclusively reserved for institituional investors. Full disclosure will be made when GMAP invests in a RealFin Group product. Do your counterparties charge fees? Investors making use of a direct account with Credit Suisse AG will pay an annual custodial fee of 0.25% charged on a quarterly basis. For investors unable to invest directly offshore (through the use of a tax clearance or with funds already held offshore), we offer an alternative arrangement via FNB Securities who make use of their offshore balance sheet capacity to allow our investors to invest on the Credit Suisse platform. FNB Securities charge a platform fee of 0.25% in addition to the Credit Suisse custodial fee. RealCap has arranged that our investors pay no charge in respect of the balance sheet capacity. Entering or exiting an investment holding will attract a brokerage fee. Is your offering a fund of funds? No we do not use mutual funds exclusively in excess of 50% of the total portfolio at any point in time is in low-cost ETPs which are utilised for our primary allocations. Investors are also exposed to specialised investment opportunities which will often be bespoke. Where mutual funds are utilised, the underlying mutual fund managers do charge fees and part of our selection criteria is to ensure the net of fee returns justify investing with the manager. RealCap charges a fee which compensates us for the role we provide in determining the asset allocation and manager selection where specialist skills and/or local knowledge are required beyond passive exposure. 14

15 Frequently asked questions investor related Why is the minimum investment high? Our offering is exclusive. We provide a highly specialised investment portfolio, both in terms of access to global investments via our Swiss counterparty and in terms of service to our investors. How often will I receive a statement from RealCap? Investor statements will be prepared on a quarterly basis to coincide with tax reporting periods, namely February, May, August and November. The statement will reflect the underlying portfolio holdings, performance for the quarter, performance since inception as well as all fees. Do you provide for investment income? We don t provide for regular income and all interest income and dividends are reinvested. Should you require regular income, this would take the form of a redemption from the portfolio which can be arranged if required. Do you provide tax reports? We provide tax reports after the end of the tax period detailing realised and unrealised gains as well as domestic and foreign income. Why do you show performance in USD? We provide performance reports in the base currency of the portfolio, namely United States Dollars as we believe this to be a good measure of an investor s global wealth. The Rand is an emerging market currency and as such is volatile. We do not want Rand volatility to cloud our investors assessment of our investment performance. 15

16 CONTACT US Tel: Fax: Physical Address: 19 Braemar Road, St James, 7945 Postal Address: Suite 762, Private Bag X16, Constantia, Invest with us today Steve Doidge Chief Executive Officer Tel: Tarryn Valle Head: Investment Strategy Tel: RealFin Capital Partners (Pty) Ltd is an authorised financial services provider - Licence No The information contained in this document is recorded and expressed in good faith and on reliance of sources believed to be credible. However, no representation, warranty or undertaking or guarantee of whatever nature is made or given concerning the accuracy and/or the completeness of such information and opinions. In no way is this document to be construed as financial advice or as an offer to invest in any portfolio or investment managed by RealCap.