Investment Consulting:


Our deep and broad research staff of 13 dedicated analysts continually evaluates investment managers and their strategies, worldwide, using well-established theory and verified techniques. We have thoughtfully structured our research to be flexible to fit specific client, platform, or Investment Board needs. Through this structure, we are capable of providing basic quantitative oversight and risk reviews to “deep dive” research, analysis, and investment/menu consulting.

All aspects of our consulting services are grounded on the work of respected academics and practitioners. Capitalizing on the work of these industry giants, we have established a universal framework to analyze asset management organizations, investment strategies, specific portfolio risk factors, and performance attribution. Broadly, we unbundle the investment landscape into style (and sub-style) specific asset classes, traditional and non-traditional, fundamental and quantitative, and active and structured. We also help clients structure investment menus that lend themselves to broad diversification and asset allocation.

We can assist in the establishment of investment objectives and implement investment vehicles and parameters to meet those goals. Our services are flexible to a client’s individual value proposition, capable of building menus that incorporate client-directed investment managers as well as aiding in the search for and monitoring of new and existing funds.

With years of investment due diligence and consulting experience under our belts, we have learned to challenge conventional wisdom. We believe that monitoring approaches that include retrospective assessments of performance, effectiveness of investment strategy and manager structure, and a review of the style biases borne by the portfolio, while critical, can be just the beginning of a detailed understanding of an investment strategy.

Quantitatively, our group uses a multi-factor framework to analyze and monitor performance and risk (active, market, and residual). We perform a multi-dimensional performance review characterized by comparisons of rolling and static time periods to appropriate public benchmarks, style-specific benchmarks, and peer groups. We set internal thresholds to aide in the identification of trends and changes in performance and risk. If a more detailed risk assessment is desired, we will dig deeper and review a strategy’s efficiency in the utilization of risk, its consistency, and the strength of its association with benchmarks and peer managers.

Based on the needs of the client, additional qualitative assessments can be performed by our group. These assessments range from a review of a firm’s generic RFP (Request for Proposal), websites, fact sheets, and/or Prospectus to SIRG-created strategy-specific proprietary questionnaires, holdings-based analysis, conference calls, and initial or regular on-site visits with the investment management firm. During these visits, our analysts will review all aspects of the organization, meet with team members and gain a better understanding of an investment strategy’s value-added and future expectations.*

*It is important to note that SIRG does not conduct in-depth compliance reviews.


Portfolio Construction:


SIRG can also be viewed as a “different” type of asset manager. Currently, our team of three portfolio construction analysts is actively engaged in the management of multiple risk-based asset allocation portfolios, providing single and multiple asset class fulfillments for Prudential's internal asset allocation providers. We also manage a discretionary, alternative mutual fund, fund-of-funds portfolio; the fulfillments of a discretionary mutual fund/ETF (exchange traded fund)-based “completion” model portfolio; and, in conjunction with oversight by a Board of Directors, multi-manager, single asset class funds.

In our Portfolio Construction role, we seek to maximize expected return for a given level of risk and look to avoid large deviations in short-term relative performance. We do this by creating and managing multi- or single-manager fulfillments using a risk-based and disciplined investment manager evaluation process (see “Investment Consulting” above). We add value through our proprietary research and unique access to managers.

With risk and return expectations established for each fulfilling investment manager, we use quantitative tools to identify the “neutral” allocation between managers. Portfolios can be tilted toward high conviction, “alpha generators” (alpha measures the manager's relative value-added, as compared to a market index, given its level of market risk) in a manner consistent with a client’s established risk tolerance. The use of quantitative techniques helps enable us to ensure that the amount of active risk is appropriate, that the percentage of total portfolio risk allocated to each manager is consistent with our qualitative judgments and confidence level in that manager, and that unintended risks are minimized.


Investment Strategy:


SIRG’s Investment Strategy team serves two primary functions.

The first is providing market perspective in support of our Investment Consulting and Portfolio Construction teams.

Style and macroeconomic factors can be an important driver of an investment manager’s excess performance. For example, managers that emphasize "cheap" companies with low earnings multiples will tend to outperform the broader market at different times than a manager that emphasizes higher quality companies with stable earnings. A manager’s style is a byproduct of their investment process and tends to be persistent over time. However, investment styles tend to cycle in and out of favor, depending on the market environment. As such it is important to have a forward looking perspective to avoid chasing recent returns, which may reflect style more than skill, when selecting or terminating investment managers.

The second is providing thought leadership research. Investment markets and investment strategies are constantly evolving. SIRG is committed to maintaining our position as a thought leader in the industry to bring our clients innovative solutions to meet their investment challenges.


Trade Operations:


Implementation, Cash Flow Management, and Reconciliation are tasks often lost in the consulting world. We have a dedicated team of experienced trading and operations investment professionals that help manage investment portfolios and aid clients in managing risks borne by changing allocations among investment managers. In dealing with multiple asset allocators, multi-manager funds and subadvisers, our group has experience working with investment managers, custodian banks, and portfolio administration teams in directing portfolio implementation. In this structure, we trade mutual funds and ETFs for asset allocation funds (including pre-trade compliance checks with client-directed guidelines), communicate cash settlement moves with investment managers for subadvisory separate accounts, reconcile daily cash for external asset allocation providers, provide performance reports for use by our analysts, and aid in the ongoing build out of our technology infrastructure.