Altis Investment Management
"The necessity for a fiduciary to be independent in its manager selection led to the start of Altis," he says. The investment process it developed focuses on the quality of implementation - specifically, on risk management and manager research.
"A crucial step in the company's evolution was the realisation that our added value - making multi-asset portfolios perform more consistently - does not come from any hard to define intuition or gut feeling," says Boelen. Rather, achieving consistent performance stems from using solid systems and in-depth analysis to discipline asset allocation and manager selection.
Although the term fiduciary management is now used very broadly, Altis defines a very narrow role for itself. The firm acts as a specialist that is insourced to support the investment process of its clients, rather than as an asset manager to whom the entire investment process is outsourced.
Institutional investors need resources and expertise both in multi-asset portfolio construction, and in manager research. "Increasingly complex investment markets mean allocating to a far wider range of assets than before, integrating external managers and specialised products into the portfolios of institutional investors", adds Boelen. And liability-driven strategies typically add another layer of complexity.
Fiduciary management meets these needs by offering impartial manager selection, and the resources to build expertise. Altis' specialist fiduciary services can be insourced, while performance responsibility may be kept in-house, depending on the institutional investor's situation.
The firm has developed its own risk management tool in-house, which is used for risk analysis and manager selection. "That is clearly very different from the other providers," says Boelen. The database covers some 650 investment managers, he says, and Altis has the ability to screen those managers on their historical holdings. This enables the team to see exactly what has happened within the portfolio of the investment managers they monitor. The new financial assessment framework, or FTK, which is expected to come into force in the Netherlands in 2007, will increase the relevance of the services that Altis offers. New regulations and the increasing importance of corporate governance create a different level of risk awareness with stakeholders demanding transparency, says Boelen.
The trend towards alternatives to achieve higher returns and broader diversification can lead to unnecessary and expensive overlaps, unless effective monitoring is applied. When a pension fund, for example, has five banks managing different parts of the portfolio, there may be no overview of what is happening on an aggregated basis, he says. "We can either provide a one-pager with an aggregate view of the total portfolio including all the overlays," he says, "or alternatively, install our risk management platform at the client for far more in-depth control".
Becoming part of the client's investment team in this way is effective, and keeps costs down, he says. Altis helps negotiating with investment managers to minimise fee expenses. The fees that Altis charges for the service are transparent, as Altis does not sell any 'own products', thus avoiding a typical conflict of interest in the industry.
"We simply select those managers that contribute to the best solution," he says. "And we do not receive any retrocessions." In the post-FTK environment, Boelen predicts that traditional banks will aggressively lose market share, because they are too slow to embrace transparency. "The fee structure they use for multi-asset strategies is often a bit of a black box."