Ensuring the appropriate mix of investments
We believe that the best way to achieve the optimum investment returns for our charities over time is to diversify investment portfolios across a range of different asset classes. We are convinced that it is not possible to pick consistently, and with absolute certainty, the winning asset class year on year; a diversified approach is crucial to producing consistent long-term returns.
There are two aspects to arriving at the most appropriate balance of investments (or ‘asset allocation’) for long-term charity funds. One is strategic, the other is tactical.
The correct strategic mix is rooted in the circumstances of the charity and will be reflected in the composite benchmark. This is the combination of assets most likely to product the optimal result for the charity in ‘normal’ market conditions over the long-term.
By contrast, the tactical mix will be the combination of asset classes that is most likely to make the most of prevailing market conditions in the shorter-term. Within the constraints granted by the trustees at the outset of the relationship, we will flex the asset allocation in your portfolio in accordance with our macroeconomic views and outlook for each asset class.
Securing access to the best ideas within each asset class
Optimal results hinge on access to – and investment in – the best securities in each area. We construct portfolios using active fund managers in each region or sector, those whom we have identified as the most talented stock pickers in their field.
Our dedicated Manager Research Team is vital to our ability to identify the most talented fund managers from around the world. The Team subjects every potential manager to an in-depth evaluation, examining their investment strategies and quantitative characteristics in order to provide a well-supported, documented investment thesis for manager selection and on-going monitoring.
With more than 30 years’ experience researching managers and approximately 40 staff, GAM has one of the largest, best equipped manager research capabilities available in Europe.
Where we are unable to identify the right manager for a given sector or geography, we will buy passive index funds, or ETFs, as a low-cost alternative.
Risk management is threaded through every stage of our investment process, and nowhere is this more important than for our charities.
Our dedicated Operational Due Diligence Team monitors and reviews every manager we seek to appoint, producing an in-depth report on each and every one, prior to its inclusion in a portfolio. The report is a rigorous analysis of fund documentation, operations and the strength of key service providers (such as administrators), with a focus on identifying potential sources of operational risk right across the food chain. Once invested, our Team continues to measure, monitor and assess the funds personnel and performance to ensure that they remain suitable.
Finally, our operations and back office infrastructure work alongside to ensure efficient administration of portfolios and their investments.