Given that prospective returns and risks for all the different types of investment opportunities are always changing, we manage the portfolios dynamically.
By doing so we seek to extract the best possible return adjusted for the level of risk in markets and individual investments. We expect to increase risk levels when the expected reward for taking risk is high and to reduce risk levels when the expected reward for taking risk is low.
The key elements of our investment process are:
1. Foundation inputs
Our core investment beliefs inform our interpretation of each fund’s investment mandate and its objectives and help us to determine our appetite for the types and levels of risk we are prepared to take in each of the funds.
2. Analysis of the investment environment
We develop a deep understanding of the investment environment we are operating in at any one time, along with regularly analysing a range of plausible future scenarios over multiple time horizons so that we can better understand how our portfolios might behave if conditions change.
3. Risk management and budgeting
Our investment policy framework helps us to clearly and effectively manage the risk of our funds at what we consider to be acceptable, rather than excessive, levels. Given our assessment of the environment and consistent with our investment policy framework, we then choose appropriate and mutually consistent risk settings for each of our portfolios, which are informed by their mandates. These risk budgets are dynamically managed.
4. Investment analysis and selection
Once we have decided on an appropriate risk budget for a given fund, we allocate and implement that budget through underlying investment activity. Our ongoing assessment of the investment environment provides us with insight into the behaviour of the investments we make and how they interact with each other in portfolio construction. We assess appropriate risk levels on a total portfolio level using a range of factor lenses.
Enhancing our decision-making process
We have undertaken a program of work over the last three years to evolve and optimise our investment decision-making process. This includes periodically assessing committee composition and skill-set and undertaking structured committee effectiveness exercises looking at how the committees make decisions and bring together diversity of thought.
We are exploring changes to our process to ensure diversity of thought is used to enhance our decision-making, with some committees moving to seeking indicative views of committee members ahead of meetings. This will ensure that time in the meeting is focussed where it can add the greatest value. In addition, some committees no longer use sequential voting, instead voting simultaneously. We have also delivered training for committee members and chairs to help committees function as effectively as possible.
Raphael Arndt, Chief Investment Officer
Sue Brake, Deputy Chief Investment Officer, Portfolio Strategy
Sarah Carne, Head of Listed Tangibles
David George, Deputy Chief Investment Officer, Public Markets
Björn Kvarnskog, Head of Listed Equities
Hugh Murray, Head of Overlays
David Neal, Chief Executive Officer
Wendy Norris, Deputy Chief Investment Officer, Private Markets