Share Prices & Company Research

Our Investment Process

Our investment process is centred around, and starts with, understanding your investment objectives, appetite for risk, capacity for loss and investment horizon.

Once this has been established and agreed, an appropriate benchmark will be selected for the portfolio mandate and then overall strategy and asset allocation will be considered by the investment manager in conjunction with our experienced Strategic Asset Allocation Committee. Individual investments will be selected by the investment manager with reference to guidance set out by our individual asset class committees. Once investments have been established, the portfolio will then be constructed, ensuring at all times that it is suitable for the agreed mandate.

Equity Criteria

Given that there are hundreds of companies within the stock universe, relative valuation metrics assist the investment manager in the screening process. Preferred ratios include Price to Earnings, Price to Book and Cash Flow metrics. With the universe scaled down, access to leading sell-side research enable the investment manager to evaluate the merits of the company, supported by an appreciation of the financial reporting accounts. Where possible, meetings with members of the management team will be organised for deeper analysis and questioning. Once the initial due diligence process has been completed, attractive entry and exit points will be established with the support of some technical analysis techniques.

Unit Trust/OEIC criteria

The initial research process begins with the track record of the fund manager, as measured by quartile performance, along with how the funds measure up in the ratings guide (S&P, Morning Star or OBSR). Our attention to the current investment process fund managers apply allows us to not only identify managers with a good track record, but to ensure that our monitoring of any changes to investment policy and subsequent impact are taken into consideration. Our extensive connections with the major asset manager groups allows for ease of access to the fund manager with meetings conducted several times a year with existing and potential funds. A more precise point that is examined focuses on the overall charges where justifiable costs in the form of the Total Expense Ratio (TER) and Annual Management Charge (AMC) are desired.

Investment Trust criteria

The criteria applied to Unit Trusts/OEIC selection is similar for Investment Trusts. However, the discount/premium to Net Asset Value (NAV) is an additional factor when looking at an Investment Trust, along with the level of gearing that the Trust may take on board.

Bond criteria

The foundation of selecting bonds begins with an attractive coupon, yield to maturity (YTM), an attractive valuation and in particular whether the bond trades above or below the par value. Once potential bonds are identified, the fundamentals of the issuer and financial stability are assessed, along with an assessment of the credit ratings from Moody’s, S&P and Fitch. From a top-down view, the influence of inflation and interest rates are examined as to what impact their influence may have on the bond over the maturity period. The final aspect of bond selection will focus on the terms and conditions such as callable or early redemption features and the level of seniority which may undermine the attractiveness of a bond.

Once the portfolio is tailored to your requirements, the investments are monitored to ensure that the portfolio does not deviate away from the overall objectives, strategy and the risk profile, thereby ensuring the investments remain right for you. Global markets are not static and the same principles that are applied to the portfolio construction process are applied to the monitoring process.
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