Investment Capability Assessment – 360°

For investment Management Firms

Approach – SEVEN STEPS

We work side by side with our clients to develop a practical and actionable investment capability assessment.

While our style is collaborative, we remain challenging and tailor each Investment Capability Assessment (“ICA”) closely to the situation at hand.

Our predilection is to test whether our clients’ investment products could be better understood by their target audience and attract their assets.

We follow a seven-step approach, that is detailed below:

1. Objective Setting

This first step deals with the initial contact with the client about the ICA project.  Tasks include exploring what the problem is, listing the client’s expectations, and agreeing a roadmap (such as what kind of data should be collected, which stakeholders need to be interviewed; how long the project take; etc.).

2. Data Collection and Peer Group Diagnosis

The key here is to collect any relevant documentation/data (internal and external), take the mountain of information on the investment strategy/product and its actual/perceived competitors, and reduce it so that it can be managed and understood. In this step, we challenge our clients to consider two distinct categories of competitors; namely i/ those that the portfolio management team consider to be their competitors (because of having the same investment philosophy, investment approach, or are part of the “most respected competitors”; and ii/ those that the sales professionals (as well as external stakeholders such as investment consultants) consider the competitors they most often face in due diligence processes.  We call those respectively, “Investment Peer-Group” and “Commercial Peer-Group”. Depending on geography and channel, there may be many competitors, but we try to focus discussions on five peers in each category.

3. Portfolio metric assessment

Having been professional manager selectors, we have developed a set of templates to evaluate portfolio characteristics, past performance patterns, etc. Data to populate these templates is done in collaboration with Internal Portfolio Analytics and Risk Management based on our existing templates.  The key here is to consider whether the desired results (e.g. performance, style, risk characteristics, etc.) have been achieved and over what time-period.

4. Portfolio Management Interview

The fourth step involves the portfolio management team pitching the strategy’s investment credentials to us. Questions asked will be those that a professional manager researcher or investment consultant would ask during a pitch meeting.  The key here is to understand what differentiates the portfolio management team in terms of investment philosophy, investment process and decision-making quality.

5. Joint Discussion

This involves an open dialogue with the portfolio management team, as well as other stakeholders to understand how does our clients’ investment proposition compare/differentiate with/from peers. When clients participate in this joint diagnostic discussion, they are more likely to acknowledge the issues and to accept corrective action.

6. Recommending Action

This involves typically a two to four-hour meeting with all the relevant stakeholders to cover areas such as:

  1. Peer-Group benchmarking
  2. Risk Management benchmarking
  3. PM Presentation benchmarking
  4. Narrative and Business Development benchmarking
  5. Q&A

7. Final ICA Report.

We provide our clients with an investment product assessment report that includes recommendations on product salability and positioning.