Our Investment Process
The Destiny multi-manager funds are managed through consistent and impartial selection of the most appropriate funds for the specific investment objective. This is a structured process that aims to control risk while generating regular outperformance.
The regulatory environment requires any advisor making a specific fund selection to prove their skill and show due process to his/her clients. Destiny therefore outsources the qualitative and quantitative analysis to Southern Cross Investment Consulting. We believe that using an independent third party remove any potential conflict that may arise through selection based on emotion rather than proof.
- Quantitative Screening
Firstly we analyse extensive data sets to shortlist funds from the full list of available funds.
- Quantitative Classification
Only funds that are aligned in both risk and performance objectives are considered.
- Quantitative Valuation
- Risk-weighted returns;
- Reproducibility and regularity of performance; and
- Fund behaviour in various financial market contexts.
- Qualitative Analysis (Meet the manager)
Qualitative analysis is based on five criteria:
- Investment philosophy and process;
- Risk management (transparency, liquidity, costs, value of assets under management and performance reports);
- Assessment of the managers' knowledge base (experience, education and skill);
- Systems, work process, administrative backup and business structure (tools, compliance, audit, and operating risk);
- Team dynamics and whether the motivation and incentives for managers are appropriate.
- Due diligence questionnaires; and
- Field visits to meet the portfolio managers, risk managers and analysts.
- Periodic Review
If any factors change with regard to the fund or the manager, we follow the process to review that fund and if necessary, look for alternatives.
To ensure that we minimise the risk of capital loss for investors:
- Risk is actively addressed through exposure to managers with a variety of different management styles and performance profiles. The resulting diversification of returns lowers the risk considerably. The performance of different managers at different times in the investment cycle is also monitored, giving further insight into a fund's investment style.
- Destiny Asset Managers aims to produce above-average returns at below-average volatility (risk) and hence focuses on managers who produce favourable risk-adjusted returns consistently i.e. high returns when adjusted for risk. Calculations using Information Ratios and Sortino Ratios are therefore the primary measures used to screen the options in the fund universe.
- Underlying holdings are continually monitored in terms of liquidity, transparency of information, consistency of the investment process and other factors.
- Internally-administered rules govern the maximum holding in any one fund or asset management house, thereby reducing the risk of potential capital loss through concentration.