At Chant West, assessing multi-manager products is a core element of our business. When we assess superannuation funds, 40% of the assessment is based on the multi-manager options offered. In assessing these products, we are primarily interested in the quality (structure) of:
- The underlying asset consultant’s resources
- Any internal investment resources
- The fund’s governance regime
- The investment portfolios
Investment beliefs and processes, and the quality and integrity of the people involved, are far more important to us than past performance. In fact, past performance counts for only about 4% of our overall assessment. In essence, what we are assessing is the fund’s ability to select superior fund managers and their ability to combine those managers into portfolios that are likely to achieve their stated risk/return objectives.
Assessing the quality of the underlying (primary) asset consultant is a key component of our assessment of a multi-manager product. Much of the information we have on consultants comes from regularly managing tenders for asset consultants and implemented consultants. We research them in much the same way that they research fund managers. Our database of information on consultants is similar to theirs on fund managers. And just as they have clients who have invested with fund managers, we have clients who have engaged/invested with consultants, and similarly we monitor their performance on a regular basis.
In November 2006, we also began to rate multi-manager products. We currently rate 12 product providers, which include the products/options of industry funds, institutions and implemented consultants. Through these ratings, we cover most of the asset consultants listed inTable 3.