Our process
Asset class research
Our thorough research methodologies take place in two stages:
- Analysis of the level of active management appropriate for an asset class
- Analysis of the investment styles that produce consistent returns in an asset class
We set different relative performance objectives for each region, consistent with our belief that different equity markets offer different levels of outperformance opportunity.
Having analysed the appropriate level of active management for an asset class, we assess the exploitable inefficiencies within the asset classes.
We seek investment styles that have worked consistently in each asset class. Beyond the conventional definitions such as value and growth, there are additional, less researched styles that have a significant impact on the portfolio return.
- Momentum - where managers consistently overweight stocks with strong price momentum. We also include earnings revision strategies in this group
- Quality - managers in this category generally have a defensive style biasing portfolios towards stocks with strong balance sheets with little debt
- Size - where managers consistently buy more mid and small-cap stocks at the expense of the largest stocks in their index
We identify the strengths and weaknesses of all styles in the asset class under consideration and determine the screening criteria for the next stage of our process; manager research and selection.
Manager selection
We require managers to have a clearly defined and well-articulated investment philosophy and they must translate this into a coherent process on a consistent basis.
We look for managers who are disciplined and who adhere to their style definitions even when the style is out of favour. We believe that these managers will produce consistently better long-term relative returns compared with those who deviate from their style according to economic conditions.
We examine the way the manager constructs their portfolio. Through risk and return attribution, we assess whether or not the risks taken by the manager reflect their specific style, philosophy and process.
We focus our research efforts on skilled managers with small amounts of assets under management.
We combine managers who have complementary, not offsetting characteristics, so that the combined portfolio does not result in simply replicating the index.
We ensure that the combined portfolio has sufficient exposure to those styles that have consistently performed in various markets and that these styles exhibit low correlations.
Our approach to risk monitoring is not to rely on any one statistic, but to assess a broad range of data. We link Style Research output to our proprietary database to produce a consolidated risk report.
We monitor and review managers continuously to ensure that none of them are deviating from their stated process and that they are consistent in their approach.
RMB Asset Management International Limited (herein referred to as RMB Asset Management) is authorised and regulated by the Financial Services Authority.
REGISTRATION NUMBER: 3733094
REGISTERED OFFICE: 20 Gracechurch Street London EC3V 0BG