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Poor implementation can drastically reduce the impact of the best investment ideas. At ipac, the investment infrastructure provides the flexibility to deliver multi-manager solutions cost effectively through the Diversified Investment Strategies or through tailored portfolios for larger clients.
ipac gains its desired exposure to managers through individual mandates that enable ipac to keep costs to a minimum. ipac will access managers through pooled products where a mandate is not feasible or where it is economically more efficient to do so.
ipac implements mandates that seek to optimise the manager’s competitive edge. Each mandate typically sets out the following:
- The benchmark against which portfolio performance is to be measured.
- The investment objective. This is expressed as a specified level of outperformance compared to the agreed benchmark over a specified rolling time period.
- The authorised investments for the portfolio.
- The ranges and limits that apply to holdings in (and exposure to) sectors and individual securities.
- The minimum number of securities the fund manager is expected to hold and the estimated level of portfolio turnover.
- The expected risk parameters for the portfolio.
- Guidelines for the use of derivatives and management of currency where appropriate.
ipac has an extensive investment operations and performance reporting team who monitor manager portfolios on a daily basis. This includes monitoring allocations, mandate restrictions, investment policy guidelines and other statutory requirements.
ipac portfolios are rebalanced within set guidelines. Each managers current weighting within a sector and the sector’s weighting within a diversified strategy are reviewed daily. ipac manages significant cash flows on a daily basis. These flows provide opportunities to avoid unnecessary transaction costs each day by effectively using cash flows for rebalancing and redemptions.
manager transitions
ipac’s investment structure enables highly efficient transitions. As investments are held through mandates at the trust level, assets common to both outgoing and incoming managers will continue to be held without realising capital gains.
ipac’s transition management process has the following objectives:
- To maintain market exposure throughout.
- To minimise costs.
- To effect the transition quickly.
- To eliminate all identifiable risks.
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