Potential strategies are discussed with potential providers. PacReef considers:
- The proposed investment proposition and the adviser’s approach to selecting and divesting of assets in the portfolio. (Philosophy)
- The adviser’s past experience and discipline in managing the proposed asset class/Investment style. (Process)
- The adviser’s past performance with using the strategy, coupled with PacReef’s own “Back Testing” of the strategy. (Performance)
- ‘The resources available to the adviser. (People)
- Any constraints on portfolio composition, the likely frequency of asset transactions and the frequency of rebalancing the portfolio to ‘correct’ for asset price movements. (Complexity)
- Expected inflows and likely market impacts. (Size)
A detailed Investment Policy document is prepared covering the investment objective, performance objective, the investment benchmark against which performance will be assessed, the portfolio structure (i.e. the asset mix to be adopted), frequency of balancing to adjust for market movements, the investments that can be held (often called the investment universe), an understanding of investment risks and how they are identified and managed. We also assess the reporting requirements expected for investors.
An offer document is prepared which discloses all elements of the investment policy and objectives, enabling potential investors (and their advisers) to assess the suitability of the strategy for their investment needs.
The investment committee meets at least quarterly to review the investment recommendations of the adviser managing the portfolio. The adviser is known as the Program Manager. PacReef works with the Program Manager to conduct a review of investment markets and understand their impact on the portfolio. The investment committee discusses potential new investments and the available background research on those investments to determine whether the Program Manager should invest in them. Underperforming assets are reviewed, causes of underperformance are assessed and a determination made as to whether to continue to hold the asset. Finally, the various weightings of the assets are reviewed and reassessed.
All changes to the portfolio caused through the acquisition or disposal of investment assets or from rebalancing the relative weightings of the assets within the portfolio are performed as a single event so that all transactions occur at the same time and price, whilst the ownership of the underlying assets of each portfolio is made in the investor’s name.
Investors receive personalised reporting on their actual performance, all additions or withdrawals from their portfolio, all transactions relating to acquisition, disposal or rebalancing of underlying assets in the portfolio as well as a commentary on the overall portfolio and market performance.