Our approach to multi-asset funds

We use a systematic approach to deliver an efficiently implemented solution that seeks to minimise overall tracking error and auxiliary trading costs as well as enhance returns. This approach offers the most significant value-add of our balanced fund offering, and aims to achieve the following:

1. Add incremental value to the risk-profiled, strategic asset allocation by harvesting the volatility of the various asset classes
2. Minimise the incidence of human biases and error
3. Optimise trade execution through algorithms within proprietary systems, that select the most efficient allocation
4. Facilitate the scalability of the solution
5. Enable low costs

Diversification is a key attribute in the way we manage our multi-asset class solutions, which helps reduce idiosyncratic or specific risk in a client portfolio..

CUSTOMISATION

Our balanced fund solutions can be customised to meet each client’s investment objectives across varying risk appetite profiles. For instance, solutions can be designed to provide conservative to aggressive capital growth by providing low-cost exposure to a range of local and global asset classes.

BENCHMARK TRADING

The portfolios track custom benchmarks that consist of a range of local and global asset classes:

1. Custom benchmarks or indices provide prudent, balanced and low-cost exposure to their respective investment universes.
2. The funds are periodically rebalanced to the underlying strategic benchmark, at an optimal frequency.
3. Asset bets are realigned to target levels when weightings fall outside the target range.
4. The appetite for tracking error in each portfolio would be within the mandate agreed upon with the client.

Our absolute return proposition follows a differentiated quantitative approach with a greater than average focus on diversified strategies that can deliver alpha throughout market cycles.

OBJECTIVE

In line with our investment philosophy of total return investing, the primary aim of this offering is to combine several sources of diversified alpha to target the expected return with the lowest level of risk.

ASSET ALLOCATION

The investment process does not rely on dogmatically following a strategic asset allocation – that is, we will not buy risk assets if we believe the risk is not being appropriately rewarded. Our absolute return offering therefore relies heavily on core fixed income, market cap weights versus fundamental weights in the equity component, and defensive inflation protection strategies. Strategies that involve market risk will be implemented when long-term risk indicates that this risk is well rewarded by high-risk premia.

Taquanta’s index-tracking capability employs a quantitative rules-based approach. Taquanta historically has a long-standing track record managing enhanced index-tracking and custom benchmark tracking funds as a stand-alone core competency, with a capability ranging from start-up to established siz portfolios.

Principally, our custom benchmark or index tracking capability seeks to replicate the performance of an asset class index, on a total return basis – in line with our overall investment philosophy. Our execution on this capability is enabled by a significant investment in proprietary systems and models that support efficient portfolio construction, risk management, performance analysis and mandate compliance, among other management tasks. Practically, our approach in this space aims to achieve the following:

1. SINGLE POINT OF ENTRY

Single point of entry to access exposure to a particular asset class, sector or theme

2. MINIMISE TRACKING ERROR

Minimise tracking error against the benchmark, as a core offering

1. Clients have the ability to require a custom performance target, which could necessitate taking (constrained) active positions, therefore widening tracking
   error

3. ENABLE A LOW-COST OFFERING

Enable a low-cost offering, through optimal trade execution and allocation

4. CONSISTENT PERFORMANCE

Consistent performance, relative to the benchmark, driven by a systematic investment process