Under a new joint venture, Sydney-based wealth manager Profile will act as the investment manager for the portfolios while Select provides investment consulting and responsible entity services, creating two diversified multi-manager portfolios exclusively for clients.
The two portfolios, Preservation and Accumulation, will be marketed under the Profile brand.
The philosophy behind the portfolios centres on an objectives-based investing approach, Select chief executive Andrew Fairweather said.
“It focuses on matching client cashflow and accumulation goals with specific, purpose-built investment portfolios, that are managed to deliver on these client objectives within specified timeframes,” he said.
“The approach moves away from strategic asset allocation (SAA) to a more flexible and absolute return focus, implemented through relatively unconstrained diversified multi manager portfolios.”
Profile chief executive Sarah Abood said the company has been frustrated by the limitations and inconsistencies of the traditional SAA approach to portfolio construction.
“SAA’s approach to risk, assumptions about investor psychology and behaviour, assumptions about long-term asset class returns and diversification characteristics, and ability to react to market changes have often been found wanting,” she said.
“So particularly during times of market stress, traditional methods and products sometimes haven’t allowed us to move as quickly or substantially as we would like to do.
“And traditional fund managers need to primarily manage their risk in relation to each other and to passive benchmarks – whereas our risk, and that of our clients, hangs more on not delivering against plan, and against cash as the true opportunity cost of investing.”
