One of the most important components of wealth management is striving for the consistent delivery of long-term investment performance tailored to each client’s requirements. We therefore construct investment portfolios to meet individual client objectives, avoiding a one-size-fits-all program.
In practice we deliver investment solutions to our clients largely through composite portfolios of funds, or collective investments. Therefore, a large part of our job is about getting portfolio construction and fund selection right, and often it is on this criterion that we are ultimately judged by the client.
Accordingly, we utilise only managers whom we trust and who we firmly believe will outperform on a risk-adjusted basis, seeking top-tier investment opportunities globally in traditional and alternative asset classes.
We endeavour to provide transparency—around risks, rationale for recommendations, processes, fees, etc. We aim to minimize the substantial, often-hidden costs from taxes, inflation, management fees, and transaction fees.
We encourage clients to take only those risks that can be understood and that have commensurate return expectations. We avoid unwarranted complexity.
FUND SELECTION PROCESS
API approved fund selection process
API recognises the fallibility of relying on personal preferences in the area of fund selection. As a professional financial advisory firm, we use a systematic process based on independent third-party research to enable us to arrive at optimal fund selections.
API uses input from 4 independent rating agencies combining both qualitative and quantitative analysis to arrive at a filtered list of API approved funds which is reviewed every quarter.
The four rating agencies are:
FUNDHOUSE QUALITATIVE TIER RATINGS
“FundHouse is an independent global fund adviser that provides specialised investment and business advice to independent financial advisers and institutions. Our ambition is to protect and grow the independent wealth management industry and to ensure the best possible investment outcome for end investors.”
API places a lot of emphasis on the FundHouse ratings and reports as they are derived at through qualitative and quantitative analysis. When markets undergo corrections, our clients find comfort in the fact that the overall portfolio is comprised of independently rated funds. FundHouse uses a 3 tier rating system as shown below. Tier 1 and 2 funds are considered to be well run funds that are approved for use in client portfolios.
Fundhouse are satisfied that this offering is managed according to a well-considered process, applied consistently and supported by the business.
This is a good fund, however Fundhouse have some minor concerns which may be people, process or business related.
There are one or more fundamental concerns about aspects of this fund and Fundhouse believe there are better alternatives.
MANAGING THE RISK
Whilst our job is often seen to be that of managing clients’ investments, managing risk is probably a more accurate description. Understanding risk is complicated, involving both the humanities (psychology in particular, both at an individual level and a market level) and the sciences.
API generally seeks to limit risk through constructing diversified portfolios, typically using collective investment schemes (unit trusts/mutual funds). Where these give flexibility to a fund manager to hold different asset classes such as equities, bonds, property, cash, etc. within the same fund, this provides a level of active management which regulates the exposure to different asset classes according to the fund manager’s views.
Given the long-term nature of most investments, they are best suited to investors who desire a long term buy and hold strategy for a substantial portion of their funds. Many investments are appropriate only for clients possessing an investment time horizon of a minimum of ten years, and preferably even longer.