Portfolio, Commentary, Insights
“You review so many investment managers, which ones should I use?”
Wouldn’t it be nice if there was one simple answer to this very common question? Choosing, retaining and replacing an investment manager requires a detailed understanding of a client’s circumstances and objectives coupled with a rigorous, evidence-based manager research and selection framework.
At Enhance we employ an experienced and highly qualified team of Investment Consultants and Research Analysts to advise our clients on manager selection. Our team is supported by an independently chaired Investment Committee, leveraging intelligence from our Mosaic database and best-in-class third party research and systems.
Repeatedly we are told that an investment manager has been selected based on a belief that an investment manager has a good reputation or other relationships that a professional advisor has in place (or that the client is aware of), both of which are important considerations. However, all investors are different and what has worked for one in the past may not work for another in the future.
During my years in the investment industry, I have regularly encountered investors that independently select the investments and/or investment managers, despite having limited experience, resources or expertise. The results are invariably very mixed.
I recall a discussion with a brilliant surgeon who had invested (speculated) in some small-cap stocks during rising equity markets, only to be left with quite substantial losses as boom turned to bust. Unfortunately, an all too common and sobering outcome.
I explained to the surgeon why I had selected them to perform my knee reconstruction surgery – taking into account their experience, qualifications, success rate, modern equipment and established team. I would add that they were not the cheapest surgeon, but one’s health is another important investment and I was happy to pay a higher fee to increase the probability of success.
Unfortunately, the surgeon had learnt the hard way that allocating capital without advice can be costly. I offered my services to operate on their knee if they ever had an injury given my qualifications and experience in investment management and they chuckled! They acknowledged that not seeking professional investment advice was a painful and costly mistake.
I am lucky to have worked with Dr Ruzhen Li since 2014 and, whilst not a surgeon, she has a sharp mind which she applies to appraise investment managers to find sources of excellence. The research and selection criteria she employs can be grouped into Performance, Process, People and Price which are continuously checked and evaluated.
Dr Li will be pleased to explain that being 51% right is statistical outperformance, but one could easily question whether that small margin is achieved by luck or judgement. Enhance has a demonstrable track record of selecting investment managers and products that outperform their peers up to 58% to 67% of the time, justifying our employment.
The ‘Enhance Portfolio’ service has been designed for investors of any size and combines our manager selection with regulated suitability advice, an investment policy statement and portfolio monitoring. The total cost is similar to investing directly with an investment manager, but with all of the benefits of independent advice and oversight included.
We concentrate on the selection of Managed Funds, curating a focussed approved list of investment managers that we have compiled detailed research on and monitor closely. When a selected Managed Fund needs to be replaced, the modern platform technology makes a switch efficient and cost-effective.
Portfolio is not a silver bullet solution for every client requirement, no such solution exists, but it is a comprehensive and compelling proposition for most investors. It would have been a suitable option for the Surgeon, who no doubt would have enjoyed and benefitted from working with the Doctor.
Enhance Portfolio is an end-to-end investment management solution for assets of any size; delivering optimum performance, risk management and administration through modern platform technology. One advice relationship, one investor account and one fee source.
Delivered by our experienced Advisory Team, the service combines the benefits of Enhance’s advice, Investment Committee and EMAP monitoring with third-party Investment Manager solutions and centralised offshore custody from Praemium International.
With investment options available across a full spectrum of risk profiles in GBP, USD and EUR, each multi-asset portfolio is managed to a defined Investment Policy. Investment Managers can be substituted easily on the platform to ensure consistent, best-in-class outcomes.