1. Identification of Client Risk
When engaging with clients for the first time it is imperative to establish a client’s risk profile in conjunction with any wider financial planning considerations.
In order to establish a client’s attitude and tolerance to risk we ask clients a series of risk-graded questions that we score to create a ‘risk profile’. A client’s risk profile is reviewed on a periodic basis and forms the foundation for the provision of appropriate investment strategies.
2. Strategic Asset Allocation
Strategic Asset Allocation is the process of allocating the target proportion of specific asset classes within a portfolio based on a long-term investment horizon.
Multi-asset diversification is fundamental to successful long term investment management. Different investments tend to rise and fall in value at different times and a well-diversified portfolio can smooth out these peaks and troughs, reducing the risk of loss and producing steady returns. Our unique proprietary asset allocation tool provides the optimum blend of assets for a target portfolio risk level.
Our sophisticated software then enables us to generate ‘optimised’ portfolios that aim to provide the best blend of asset classes for a set amount of portfolio risk.
3. Tactical Asset Allocation
Tactical Asset Allocation involves adjusting the long-term strategic asset allocation in order to benefit from short-term factors that could impact on clients’ portfolios.
The Bartholomew Hawkins Asset Management Investment Committee (IC) meets on a monthly basis and is responsible for the tactical decision-making process within core strategic asset classes. The IC will always ensure that any tactical changes made to portfolio asset allocation do not cause a material shift in portfolio risk.
As well as tactical asset allocation, we also incorporate an additional tactical layer in the selection of constituent investments to ensure our clients’ portfolios are appropriately placed to provide the optimum investment return for a given level of risk.
4. Investment Selection
The investment selection stage of our investment process is crucial in order to ensure that only the most appropriate investments are selected for inclusion within client portfolios. We allocate significant resource to conduct high levels of analysis incorporating both primary and secondary research.
Bartholomew Hawkins Asset Management has devised a suite of automated quantitative screening tools that focus on identifying investments that provide consistent strong risk-adjusted returns. These tools are essential in order to make the investment selection process efficient and allow for additional rigorous qualitative analysis.
We believe that our investment selection process is far superior to many of our peers and provides another layer of added value to clients in addition to strategic and tactical asset allocation.
5. Risk Management
Risk control is key to portfolio construction and ongoing management of client portfolios. Our unique software allows for daily monitoring of risk across all portfolios, which negates the requirement for random periodic portfolio risk monitoring which many of our peers conduct.
This sophisticated risk management software instantly highlights portfolios that have drifted too far from set risk parameters. This allows any necessary changes to be instantly made, bringing the portfolio back in-line with its target risk tolerances.
A significant benefit of this system is the ability to set risk tolerances at investment-specific level. As a result, unlike many of our peers that periodically needlessly rebalance whole portfolios incurring excessive dealing costs, our Investment Managers can take action in isolation and minimise portfolio costs.
Download the Investment Process PDF here.