Recent changes to the FPM portfolios

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Our disciplined investment process drives portfolio construction.  Part of this process involves subjecting portfolios to both a qualitative and quantitative due-diligence process which allows us to identify and select only the best quality unit trust funds for our clients’ portfolios.

Executive summary

Our continued review process of managers resulted in the identification of a manager we thought could enhance the current portfolio.

The manager was subjected to a full governance and investment due diligence by our independent investment consulting partners, Analytics Consulting.

The Investment Committee decided to allocate a portion of the portfolio to the Nedgroup Investments Opportunity Fund, managed on a sub advisory basis by Abax Investments.

The asymmetric return profile of the fund is unique in the market and would contributed to the characteristics of our portfolio.

The detail

The above decision was made after assessing the effect of the change on various levels. Below find a summary of these findings:

  1. The above change resulted in very little change in the historical occurrence of beating both our CPI target as well as our peer group target.
  2. The assymetric profile of decisions should result in lower drawdowns in the fund.
  3. Diversification across asset classes to reduce risk and volatility relative to an average prudential portfolio.
  4. The inclusion of the new fund improved the historical recovery period of the portfolio.
  5. The asset allocation remained the same with marginal changes in underlying regional exposure.

The change will result in a slight increase in fees, using the Total Investment Charge of the funds as at end of June 2017.  However, we believe we are enhancing the payoff profile of the portfolios and are confident that the fees are justified.

The decision was made to go ahead with the change with immediate effect.

Conclusion

We believe this decision is in the best interest of our clients and will enhance the characteristics of the FPM Moderate portfolio.  We also want to assure you that similar opportunities are always assessed across our portfolio range on a continuous basis.

FPM RISK AND WEALTH MANAGEMENT (PTY) LTD  IS AN AUTHORISED FINANCIAL SERVICES PROVIDER – LICENCE NUMBER: FSP 46610

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)

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