GAM will work together with you in an iterative process to ensure we fully understand your overall portfolio objectives and assess the ways in which a hedge fund allocation can add value. These discussions are supported by our extensive analytical tools, which provide us with a sound modelling basis on which to define your specific parameters, including:
• Return objectives
• Volatility tolerance
• Drawdown tolerance
• Correlation ranges to asset classes and indices
• Concentration guidelines
• Liquidity requirements
• Transparency commitment
• Asset allocation framework
In addition to clearly defining your investment parameters, we know it is vital to also define any operational requirements. Your investment can be set up in a variety of ways, for example as a custom segregated account that gains access to GAM’s own managed accounts. This offers you the advantages of capacity with underlying managers which may be otherwise closed, strong liquidity and fee terms, ability to apply leverage, and fully transparent reporting. Finally, we will work with you to establish reporting guidelines, service levels and design of any joint decision-making committees that may be required.
We summarize all aspects into a proposal document with the aim of giving you both a full understanding of the proposed portfolio and a comprehensive roadmap of how your partnership with GAM could work. This provides a sound basis for further discussion with you to ensure the solution fits your needs. The proposal typically includes:
- Rationale for portfolio strategy, qualitative objectives and thinking
- Manager line-up with investment cases for each manager
- Manager and strategy portfolio weights
- Detailed and transparent risk and statistical analysis of the modeled portfolio
- Calendar of regular meetings with your dedicated Portfolio Manager and other relevant GAM team members
- Specifics of all regular reporting you will receive and access to any GAM systems to which you may be entitled
- Details on investment structure and proposed service provided
- Objectives, process, participants and agendas for joint investment decision-making committees (if applicable).
The proposal documentation typically includes some of GAM’s proprietary reports, such as forward scenario modeling analysis, output of our
optimization tools, liquidity analysis of the proposed portfolio, and other details which will give real insight into the portfolio.
Using the agreed solution, GAM liaises with the key service provider and manages legal contracts in an effort to minimize the burden on you,
all the while keeping you informed of relevant milestones and issues. In addition, GAM will deliver a pack of supporting portfolio data, which
- Full portfolio characteristics including position sizes, weights to managers, etc.
- Updated descriptions, investment cases and investment due diligence summaries for each manager
- Operational due diligence reviews for each manager
- Portfolio, strategy, and manager level weekly returns analysis
- Portfolio sensitivity to key macro factors using our proprietary Risk Dashboard tool
- Forward-looking portfolio stress tests under a range of market scenarios
- Portfolio optimization showing the impact of different combinations of constituents.
On an ongoing basis, you will receive transparent monthly and quarterly information to complement and enhance your understanding of the
portfolio in addition to regular communications with your Portfolio Manager. GAM’s regular reporting typically includes:
- Holdings report with hedge fund names and weights
- Market review and outlook commentary
- Performance summary, analysis, and contribution
- Factor-based portfolio stress testing
- Risk Dashboard output covering:
- Exposure by geography
- Exposure by asset class
- Long, short, and net exposure by strategy
- Cross-correlation analysis
- Portfolio-level factor analysis over time
- Manager-level factor analysis over time
- Stress test analysis
- Portfolio, strategy, and manager level weekly returns analysis, covering volatility, correlation, and beta to various asset classes.
- Identical data and analysis from the monthly pack, but run for the most recent quarter
- GAM’s proprietary research and analysis on each manager held in the portfolio including:
- Current investment case for manager and fund
- Detailed quantitative profile containing comprehensive performance data, as well as statistical return, risk, and comparative analysis of both the fund and relevant benchmarks
- Operational due diligence report showing key risk areas (eg trading controls and quality of operational staff) and GAM’s assessment of those.