Asset Allocation constitutes the most important step in portfolio by bestt571

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									     Asset Allocation constitutes the most important step in portfolio
     construction, accounting for more than 90% of the variability in
                     portfolio performance over time1
1
    G.P. Brinson, B.D.Singer, G.L. Bebower, “Determinants of Portfolio Performance II: An Update”, Financial Analyst Journal, May-June 1991.
                         Introduction                                               Background to

                         RMB Asset Management International (RMBAMI) has            RMB Investment Services act as the fund manager of
                         created a series of core Funds (Harmony) based on          the Harmony Funds. They provide specialist investment
                         its belief in the vital role played by Asset Allocation.   management and administration services to financial
                         RMBAMI has the following characteristics.                  intermediaries and their clients. Their approach is to
                                                                                    focus on providing a highly personalised and tailored
The FirstRand Group      Boutique Size/Style:                                       service in multi-fund and multi-manager investing.
is one of the largest
                         RMBAMI are extremely innovative and responsive;            The team uses the latest technology and draws on
quoted companies
in South Africa,         service levels are exceptional.                            in-depth experience of this relatively new style of
with a market cap                                                                   investment management. RMB Investment Services
of USD11.2 billion
                         Experience/Expertise:                                      is based in Guernsey, a leading offshore investment
as at 30 June 2008
and assets under         The RMBAMI team (details enclosed) has decades             location offering valuable Client protection.
management and           of individual experience and an ethos summed up by
administration of        CEO, Glyn Owen as ”We employ no journeymen; all            Background to the Harmony Funds
USD124 billion as at
                         are experts and quality is all-important”.
30 June 2008.
                                                                                    The range of Harmony Funds has been designed
                         Track record:                                              to provide a core, bespoke solution using Strategic
                         The RMBAMI team has an excellent track record              asset allocation for Financial Services Professionals
                         in terms of performance and of giving service to           (FSP) and their clients. Globally diversified solutions
                         investors.                                                 have been provided in: US$, €, £, and an Asian blend.
                                                                                    Two different risk-profiled portfolios are offered in
                                                                                    each base currency: a Balanced and a Growth fund.
                         Background to                                              We do appreciate that some Clients and advisers
                                                                                    may have more specific requirements and therefore
                         RMB Asset Management International is the                  we encourage the use of selected (Satellite) third
                         investment manager of the Harmony Funds. They              party investments outside these core portfolios at
                         represent the international multi-management arm           an individual Client level.
                         of the FirstRand Group and conduct research in
                         all international markets and across all major asset        Core & Satellite Example:
                         classes. The business was founded in London in
                         1998. The company offers bespoke multi-manager                                   5% Emerging
                                                                                                            Markets
                         portfolios for institutional investors, Funds of Hedge
                         Funds and bespoke segregated portfolios. They
                                                                                                            Min 80%
                         also offer an Advisory service for High Net Worth                 5%               Harmony         5% Specialist
                                                                                        Commodities       USD Balanced       Alternatives
                         individuals and international intermediaries. Assets                                Fund
                         under Management were $3.8 billion as at December
                         2008. RMB Asset Management International is                                       5% Private
                                                                                                            Equity/
                         authorised and regulated by the Financial Services                                 Venture

                         Authority (FSA) in the UK.




    Harmony Portfolios   Page  of 6
The Harmony Funds are structured as a Guernsey                   any meaningful out-performance. Where foreign
ICC, which is a unitised collective investment scheme.           currency positions are taken in the portfolios, this
Investors who hold these unitised funds benefit from             is predominantly within the equity exposure.
the fact that the funds are frequently priced and the
NAV is published. The structures are tax efficient            2. Diversification of asset classes. All the portfolios
compared to individual holdings and the fact that                offer good diversification between asset classes.
Clients’ assets are pooled gives greater negotiating             This is designed to shelter the investor from
power for lower fees.                                            falls in any one asset class over short periods.
                                                                 In terms of efficient frontiers, this diversified
  What is Strategic asset allocation                             approach reduces volatility, whilst maintaining
                                                                 expected returns.
  Strategic asset allocation is used to construct a
  portfolio that meets its long-term goals rather than
                                                              3. Sensible tolerance limits for tactical asset
  concentrating on the short-term performance of
                                                                 allocation. RMB Asset Management International
  the varying asset classes. The long-term risk and
  return characteristics of the asset classes are used           is allowed to reflect its current House View in the
  to construct the portfolio’s asset allocation. Strategic       portfolios, but only within pre-defined tolerance
  asset allocation usually remains in place over a long          limits. Therefore, an investor in a Harmony fund
  period of time and should enable the portfolio to meet         can be certain that at no point will the risk profile
  its objectives.                                                of the portfolio change markedly from the product
                                                                 he or she originally purchased.
  Source: Navigator News (Aviva Australia / April 2005)

                                                              4. Avoidance of single manager hedge funds or
The Harmony Funds have pre-defined tolerance                     highly leveraged products. Whilst Clients may
limits for holdings, and a long-term strategic target            be tempted by strong past performance of some
allocation. The funds are adjusted tactically when               of these funds, many high-risk investments
deemed suitable by the investment committee, to                  ultimately end in failure and disappear from
express tactical asset allocation views within these             all performance databases, thus creating a
tolerance limits.                                                ‘survivorship bias’ which does not paint a true
                                                                 picture of the long-term performance of this
Rationale Behind the Structure of the                            asset class.
Harmony Funds
                                                              5. Avoidance of any derivative strategies used
The focus is on capital preservation and reduced                 for purely speculative purposes, except when
volatility within each given risk profile. This is achieved      contained in a well-diversified Fund of Hedge
in a variety of ways:                                            Funds strategy.

  1. High exposure to the base currency, typically most       6. Avoidance of funds with simulated track records.
     portfolios range between 60% and 70%. Research              All investments are researched thoroughly by our
     has shown that foreign currency exposure merely             team of analysts and an explainable track record
     adds to short-term volatility without generating            is normally required prior to investment.




                                                                                                           Page  of 6   Harmony Portfolios
                                          Harmony USD Balanced Rolling Asset Allocations
                                   Money Market, 3%                                                  Money Market, 1%
                     100%
                                                                      Money Market, 8%
                                   Commodities, 5%
                                                                                                     Commodities, 12%
                      90%                                             Commodities, 8%
                                                                                                                                     Money Market, 28%
                                      FoHF, 16%
                      80%                                                                                FoHF, 16%
                                                                         FoHF, 16%

                      70%            Property, 15%
                                                                                                        Property, 9%                    FoHF, 10%
                                                                        Property, 11%
                      60%                                                                                                               Property, 5%


                      50%          Fixed Income, 24%

                                                                      Fixed Income, 31%              Fixed Income, 41%
                      40%                                                                                                            Fixed Income, 37%

                      30%

                      20%             Equity, 37%
                                                                         Equity, 26%
                      10%                                                                               Equity, 21%                     Equity, 20%


                       0%
                                       Jun 07                             Dec 07                          Jun 08                         Dec 08

                                        Equity         Fixed Income        Property       Fund of Hedge Funds          Commodities    Money Market



                     Source: RMB Asset Management, September 2008.




                     Investment Committee                                                   RMB Asset Management International
                                                                                            Research Team
                     The Investment Committee of the FSP would be in
                     regular contact with senior members of the investment                  The performance of the portfolios is very much a
                     team at RMB Asset Management International.                            team approach. The team at RMB Asset Management
                     The structure of the portfolios is therefore determined                International is highly experienced and each member
                     by a two-way process and in this regard any feedback                   of the team has a different role to play.
                     from advisers and Clients can be relayed to RMB
                     Asset Management International and changes made                        Glyn Owen is CEO of the business and heads the
                     as appropriate.                                                        Investment Committee determining the tactical
                                                                                            positioning of the Strategic portfolios. Glyn also
                                                                                            attends a high proportion of all incumbent manager
                                                                                            meetings and is heavily involved before a new
                                                                                            manager is appointed.




Harmony Portfolios   Page  of 6
Tom Joy is the Chief Investment Officer of the           Additionally James is lead analyst on property and
business and is responsible for the performance of all   other alternative long-only investments.
the RMB Asset Management International manager-
of-managers funds, as well as the performance of         Underlying Investments
our range of institutional portfolios. Tom is also a
senior member of the Investment Committee and            Due to the large asset base invested by RMB Asset
is responsible for the design and implementation of      Management International, the Harmony portfolios
our investment process across all products. Tom’s        are able to gain access to many offshore funds
research forms the foundation of the investment          that would be closed to smaller investors. In this
approach adopted in the Harmony Funds. Tom is            regard, initial fees are always waived, the annual
heavily involved in all manager research across all      management charges on third party funds are
regions.                                                 significantly reduced and the standard minimum
                                                         investment levels can be overridden. This allows
Martyn Simpson is head of the Advisory service           private investors to gain exposure to a diversified
and has primary responsibility for the structuring       range of offshore funds in a cost-effective manner,
and performance of all portfolios designed for HNW       with very low minimum investment requirements.
Clients and intermediaries. In this regard he has        Many of the selected investments are either closed
day-to-day responsibility for the Harmony Funds.         to new business or are not available via any other
Martyn is responsible for the production of the third    offshore fund structure.
party recommended fund list and also recommends
investments that are not already covered by the team     Reporting
of analysts, such as Private Equity/Venture Capital
and Funds of Hedge Funds.                                Monthly investment performance and factsheets
                                                         are produced and sent out by the third week of
Mike Allen is the Head of Fixed Income. Mike has         the month. Bespoke quarterly reports are also
the responsibility of manager selection in the fixed     provided for the portfolios which explain the recent
income fund of funds. Mike is also an active member      performance numbers and detail any changes.
of the investment strategy team.                         A generic monthly investment update (Viewpoint) is
                                                         also sent out to all Clients. This report details the
Richard Atkinson is the Head of RMB Asset                performance of the Harmony Strategic Portfolios,
Management International’s fund of hedge fund            as well as providing an update on markets.
division. Richard is a highly experienced member         RMB Asset Management International is also
of the hedge fund industry. Richard has ultimate         committed to maintaining regular contact with
responsibility for performance and strategy              all FSP advisers via conference calls, videos and
formulation for the RMB fund of hedge fund team.         business trips to international locations.

James Klempster is the assistant portfolio manager       Benefits Summary
to the advisory team. James is responsible for
trading, portfolio construction and additional               • Independent Asset Allocation:
research into the holdings of the advisory clients.            RMB Asset Management International




                                                                                                    Page  of 6   Harmony Portfolios
                          • Frequent Tactical Re-weighting :                       - Index Trackers:
                            RMB Asset Management International                       More cost effective and flexible in some
                          • Reporting:                                               efficient markets.
                            a. Monthly fact sheets and investment updates
                               (Viewpoint)                                  Conclusion
                            b. Quarterly in-depth reports
                            c. Online access                                The range of Harmony Funds has been designed to form
                          • Cost efficiencies:                              the core part of a Client’s portfolio. They have not been
                            Single trade access to portfolios via most      designed to chase the latest market trends and are not
                            platforms and product providers                 designed to time the markets or speculate on currencies
                          • Access to:                                      or asset classes in any way. They are well diversified
                            - Detailed Research:                            portfolios and each portfolio has a pre-defined risk and
                              RMB Asset Management International team       return characteristic. With seven unitised funds on offer,
                            - Funds closed to individual investors:         and the ability for the FSP’s Investment Committee to
                              Size and capacity restraints                  give input into the construction at any time, an adviser
                            - Segregated accounts:                          should be able to use at least one of these funds to
                              More cost efficient than fund of funds        provide any Client with a core investment solution.




Harmony Portfolios   Page  of 6
Risk Disclosure
This document has been prepared by RMBAMI, for information only and only for use in those jurisdictions in which the service may be
marketed. It is not a solicitation, or an offer, to buy or sell any security. The information on which parts of the document are based is
deemed to be reliable but we have not independently verified such information and we do not guarantee its accuracy or completeness.


INVESTMENT RISK DISCLOSURE STATEMENT


The prices of securities units may fluctuate, and some securities may fluctuate widely, in price, according to market factors, the nature
of the type of security concerned, and the term over which it is held. The price of any security may move up or down. If prices move
down, losses can be incurred. The losses in some circumstances may extend to the full amount of the investment. Past performance
is not necessarily a guide to future performance. The profit or loss in transactions in foreign/cross-currency-denominated contracts
will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to
another currency.


The Manager of the Harmony Strategic Portfolios is RMB Asset Management International Limited, London.


This document may not be circulated or delivered to any person in the United Kingdom except in the circumstances specified in the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2001, and may not be circulated or delivered by any person authorised for the
purposes of the Financial Services and markets Act 2000 of the United Kingdom, except pursuant to an exemption under the Financial
Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001.


Funds unauthorised by the Hong Kong Securities and Futures Commission (“HKSFC”) are not to be offered to members of the Hong
Kong public. If a member/s of the Hong Kong public selects one or more HKSFC unauthorised fund/s, they are required to complete the
Unauthorised Fund disclaimer, other than in circumstances that do not constitute an offer to the public within the meaning of the Securities
and Futures Ordinance of Hong Kong.


For further information and a copy of the scheme particulars, please contact:
customer.services@harmonyportfolios.com




                                                             www.harmonyportfolios.com


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