Managers’ skills crucial for super funds
The capabilities of asset managers should be carefully considered when selecting a pooled super trust, with a focus on the areas of weakness, according to van Eyk director and head of asset consulting Mark Thomas.
"Not all managers are the same and so the need to focus on weaknesses and examine the qualitative elements of each manager is important. This is where the addition of value will occur," Thomas says.
"With combined managers it is worth drilling down and finding the differences in portfolios and past performance as well as risk levels and tracking error in changing environments."
Thomas says while past performance is a good indicator, history is not always the best guide and it is worth comparing any findings relative to indexes.
As such quality control in a manager's assets is paramount, says Thomas, as is examining the risk component and what part of any portfolio is represented by this.
At the same time a high level of accountability is important as Thomas says he has seen boutique managers fall down due to lack of resources.
"The focus has to be on the intangibles as there are no mechanical models to check if systems are flawed even if they are used by experienced people to highlight value," Thomas says.
However Thomas says even though these can be seen as relative numbers in a relative world it is important to return to an original position after any loss.
"If in doubt ditch bad managers. There are literally dozens of managers locally and to achieve the right mix start tight and then open up until the right level and styles of manager is met," he says.
"Once they have been screened look bottom up and see where each manager fits in the market and adopt a mix of value and growth. The reason being that if there is an overweight position in certain stocks across the managers it means the fund is overweight in that sector also."
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