Manager Selection & Portfolio Construction

Manager Selection & Portfolio Construction

At Harbour Reach, we employ a top-down asset allocation approach, based on expected returns for the different asset classes.

That said, we don’t believe that asset allocation and implementation can be considered entirely separately. Individual products or strategies need to be considered for there impact on total portfolio risk and the ability to meet objectives with a high degree of certainty. Implementation is a very important step in targeting objectives, and certain products may be more appropriate for some strategies and tax rates than others.

Firstly, we use our proprietary quantitative tools to understand the universe in each asset class first of all. We then look to identify strategies that can meet the given objectives. After identifying candidates quantitatively, we follow up with qualitative research.

In selecting managers, we look for a consistent and persistent ability to meet performance expectations. If there is a cheaper way to meet a particular objective, we will take the cheaper option. We don’t believe in hard philosophical commitments to one particular method or other. We look for robust and repeatable processes, run by well-resourced teams, with interests aligned with clients, appropriately structured and at a reasonable cost.

We then construct portfolios with the aim of meeting an objective with a high degree of certainty and an acceptable level of risk. In essence, we look to selectively take risk where it is likely to be compensated by an additional return. An important consideration is therefore to employ a process that is as systematic as possible, to create efficiencies and avoid making mistakes.

We use our tools to provide manager and product selection guides through our consulting service and offer SOA/ROA disclosure wording for use by advisers.