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A growing number of investors turn to prudent investment, seeking capital preservation with equity-like returns and limited correlation to the other asset classes. alfinas takes on multiple tasks of the complex, ever-changing dynamics inherent in AIS portfolios. Our proprietary investment process seeks to combine both strategy and manager diversification with a distinctive portfolio construction methodology.


 

AIS Advisory Process


 

Industry Research and Manager Due Diligence


 

Global Universe of Single and Multi-Manager Funds


 

 

 

Client Criteria


 

 

Relative Value


 

Event Driven


 

Opportunistic


 

Managed Futures


 

Fund of Funds


 

 

 

 

 

 

 

 

 

 

Focus Managers


 

 

Manager Selection: best match rather than best of class funds that are open for investment


 

Portfolio Construction: biorhythm, style and manager weightings to optimize risk/ return


 

Portfolio Monitoring: ongoing portfolio and manager oversight and re-balancing

Our Investment Manager Search Process

alfinas' analyst team offers an ongoing evaluation and recommendation of investment managers to investors. We follow a well-defined and disciplined procedure. We evaluate managers in an effort to identify those investment professionals with a balance of superior performance on a consistent basis. We strongly believe that only managers who have a distinct research or investment edge - through original research, unique portfolio construction or superior trading skill - can produce sustainable returns over entire market cycles.

The Three Keys of Confidence

Reliabilty of
Manager


 

Reliability of
Organization


 

Reliability of
Portfolio


 

 

 

 

 

 


Future Performance Probability
Fund's Survival Rate


 

Our Investment Manager Screening Process

Manager selection must be made within the context of the overall portfolio. We study how managers achieved past returns to fully assess their funds' risks. However, our focus is more on those characteristics that will affect their future performance, including:

  • Security selection skills
  • Portfolio management ability
  • Personal character
  • Personal commitment
  • Risk controls
  • Back office systems

Every effort is made to get behind the numbers in order to understand how a manager can be successful in the future.

Click on a section to view the full details

Investor Needs


 

Search Criteria


 

Qualify Candidates


 

 

 

 

 

 

 

Identify Needs

Utilize modeling conclusions to develop investment strategies.
Identify need for manager searches based on investment strategy.

Scope of the Search

Work with the investor to determine the search criteria.
Develop an RFP that focuses on the key requirements of the investment mandate.

Define Screening Criteria

Identify a customized set of critical success criteria for each search including qualitative and quantitative factors.

Fundamental -Quantitative and Desk Research

Perform an in-depth anaylsis of the investment strategy and philosophy. Perform a sophisticated quantitative analysis of the manager's historical performance. Perform a rigorous background check of the manager's professional and personal history.
Rank managers against others with similar mandates.
Weight the key determinants for selecting the appropriate manager.

Proceed to Selection

Review of pre-selected candidates, qualified for their potential to suit the defined investment plan. Focus on organizations with a strong commitment, professional skills, discipline and consistent track records.

Establish a Short List

Manager Proposal; give written profiles for each manager on the recommendation list; a comprehensive information pack in a format which makes it easy to compare them on the basis of factors such as organization, investment philosophy, decision process and historical results. Schedule formal presentations of each organization which are discussed and reviewed together with the investor.

Standard and Customized Screening Criteria

Our Standard Screening Criteria can be resumed to a four-faceted Due Diligence Process. The screening criteria can be customized to each investor and type of portfolio. In general, alfinas relies on the following when recommending managers for consideration:

  • Stable investment management team and sound business practices.
  • High quality investment process that is understandable and repeatable.
  • Top quartile risk-adjusted return profile.
  • Style and risk profiles consistent with stated investment process.
  • Infrastructure to control business and investment risks.
  • Commitment to high quality client service and controlled growth.

Minimum Criteria Screens

  • History: (min. years of operation for the company and for the funds; min. years of experience of the team),
  • Clean composite: (audited AIMA compliant, percentage of assets within compliance, back-tested/simulated data),
  • Verifiable performance: above stated benchmark for all the periods examined,
  • Volatility: highest acceptable monthly volatility
  • Performance: Absolute & Relative Performance Minimums required
  • Actual AUM: level of assets for the company and the funds

Qualitative Criteria Screens /Desk
Research

  • Firm specific information: (ownership structure, business focus on investment management, litigation)
  • Terms of investment: (fee structure redemption, subscription policy)
  • Personnel and manager's background: (extent of staff experience, stability, nature of compensation package)
  • Philosophy/process: (clearly defined and achievable philosophy, consistently applied over time, risk/reward, appropriateness for client, purchase/sell discipline, risk control measures, portfolio characteristics, style consistency)
  • Risk control focus: risk control measures, management team diagnostics/tools, dedicated risk management team

Quantitative Criteria Screens

Combination of peer group analysis, style analysis / biorhythm and correlation analysis

  • Maximum draw down: considered the most valid measurement of a manager's risk, this is the maximum loss if an investment were made at the hedge fund's peak and sold in its trough.
  • Downside deviation:a major indicator of a manager's ability to control risk during adverse markets.
  • Standard deviation: we believe a very high upside deviation could foreshadow a similar downside deviation - and large draw down - in another market cycle.
  • Beta and R-Squared: we study a manager's market exposure/correlation and measure the risk in order to evaluate the ability to meet stated goals.
  • Gross and net market exposure: gross leverage is a major factor in a portfolio's overall risks and can greatly affect the magnitude of any potential loss. Net exposure is normally an indication of future "Beta" (market-dependent return) and overall market correlation.

Manager Interview / On-site Visits

  • Formal presentations are scheduled with each selected manager in order to brief each organization on the investor's specific objectives and concerns
  • Arrange and participate actively in the interviews to ensure that all issues are addressed and that all the information needed to make a sound decision has been brought to the table.
  • Check and review each manager's portfolio, decision process and business practices.