Harwood Capital, which was founded by former National Bank of Abu Dhabi Group CIO Alan Durrant and former F&C and Architas multi-manager Richard Philbin, is looking to work with advisers to provide a range of investment management options for their clients.
The proposition includes a discretionary fund management service and access to multi-manager funds managed by Philbin. However, one of the key aspects of the proposition is the additional support and services the company will be able to provide to an IFA partner company.
Durrant describes the proposition as providing an “in-sourced” investment director who will be able to provide ancillary services such as monthly investment updates for clients.
The chief executive said Harwood describes the process as an “in-sourced” solution rather than “out-sourced”, which is more commonly used to describe discretionary fund management services, as the idea is for the boutique to work very closely with the IFA to provide investment solutions aligned to their clients’ needs.
Integral to the proposition are two quantitative processes – Semafour and Portcullis – which are used to build a strong universe from which to choose funds and to shape portfolios to match a client’s risk profile. Both processes, it should be noted, are used in conjunction with deep qualitative research.
Semafour, which has been designed by Philbin – who also created the Traffic Light Analysis tool at F&C and MOSAIQUE system at Architas – is designed to take a fund sector, such as the IMA Japanese Smaller Companies sector, and to screen it for performance, volatility, correlation, tracking error, alpha and information ratio.
Durrant said the idea is to highlight funds with what Harwood describes as “multi-dimensional consistent-consistency” and to provide funds within a sector with a ranking. These go from green at the top end, representing those funds which are within the most consistent top 20%, to grey, representing the bottom 50% of the peer group.
In the case of the IMA Japanese Smaller Companies sector, for example, which contains only four funds, Durrant said a staggering 28,800 calculations are made.
Portcullis meanwhile, as the name may suggest, has been designed to manage the risk within a client’s portfolio.
Durrant explains that risk is all too often “pigeon holed”, with estimations made based on relatively large assumptions, but that in fact risk variants, even within one sector, can be very wide.
Furthermore, Durrant said all too often a client’s portfolio is designed to match a specified risk profile at the start, but that, due to the changing investment landscape and changes made within funds, the actual risk is very different over time.
Portcullis aims to smooth this out and to make adjustments to a client’s portfolio to ensure risk is not “an afterthought” of the investment process.
Durrant said, having worked in the Middle East, his experience tells him there will be an appetite for this type of client-focused “hands on” approach to investment services in the region.
