In the new world, the production process is segmented between focused players working with low fees / large volumes
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Building the Investment Process (IP) |
Long term research effort (>3 years). Built by a team of specialists. « The Research Lab ». Mark Registered / Process Patented (?) |
Selecting a Portfolio Management team |
Relying on the skill and the expertise of the Portfolio Management Team |
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Reviewing the Investment Process and controlling for the Operational Risk |
A Global, High Reputation Company reviews the IP end to end, sets operating standards and puts its brand on it as a stamp of approval. (Delegated Monitoring) |
Execution and operations |
Driven by the Portfolio Manager and his protected know-how. |
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Separating the Investment Process Delivery from the Production Environment |
The Production Environment Is at Arm’s Length from the Investment Process. The Performance Drift between the two is constantly monitored |
Heavy Middle and Back Office Involvement |
Booking, slippage minimisation, best execution, reporting, liquidity review |
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Organised, large scale Distribution |
Two levels of Sales Due Diligence: Sell the IP to the Product Sellers, then Sell the Product to the end client. The client benefit: buying a very clear Investment Process for tight distribution fees |
Bespoke Distribution |
Selling the reputation of the portfolio manager and his past performance (Morningstar Stars). The client benefit: buying « Best in Class » reputation at a cost commensurate with the perceived skill. |
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