boosst Investment Committee

So… what does the boosst Investment Committee actually do?

Systematic, evidence-based investing often results in very little activity in a portfolio. From the perspective of performance, this is good news – as increased trading within a portfolio is accompanied by increased transaction costs. boosst are focused on minimising the charges paid within our portfolios, meaning that clients keep as much of the performance as possible. We can all agree that an important variable of investment management is keeping as much of your returns as possible, and losing as little to charges as possible.

It is wrong to think that having little activity is the result of a simplistic investment strategy.  In fact… the boosst Investment Committee would be aggrieved at such a suggestion!  Considerable effort goes on behind the scenes to allow this state of calm consistency to exist for clients.  The fortitude and discipline to deliver ‘not much needs to be done to your portfolio except for rebalancing’ advice, comes from a rigorous process of ongoing challenge to the status quo.

The broad terms of reference for our Investment Committee are:

Manage risks over time

The Investment Committee is responsible for the oversight of the risk in portfolios and the wider investment process. Meetings are regular and minutes are taken, which include all action points to be followed up on. Third-party inputs and guest members – such as Tim Hale from Albion – provide independent academic insight and challenge.

Challenge the process

The investment process at boosst is driven by the latest empirical evidence and theory available. It is always open to challenge. If new evidence suggests that doing things differently would be in our clients’ best interests, then we will revise our approach. The investment process is evolutionary, but change is most likely to be slow and incremental.

Review the portfolio structure

The underlying characteristics of the boosst portfolios are reviewed, including performance and risk level attributes. Risks (asset class exposures) and their allocations within a portfolio are evaluated. Any issues are raised and resolved. Existing asset classes are reviewed alongside asset classes and risk factors that currently sit outside the portfolios. Areas of interest are placed on a longer-term ‘watch’ list.

Review the incumbent ‘best-in-class’ investment products

The existing funds that we use are ‘best-in-class’ choices seeking to deliver the returns due to investors for taking specific market risks. Each product has a role to play in a portfolio and its ability to deliver against this objective is regularly reviewed. Any product-related issues are raised and resolved.

Screen for new products and undertake appropriate due diligence

Although the underlying funds were recommended as ‘best-in-class’, new funds are regularly being launched. Tough screening criteria are in place against which new funds are judged. New, potential ‘best-in-class’ funds face detailed due diligence and approval. They are included only when they make the grade.  Given the quality of the funds already in the boosst portfolios, the threshold for replacement is high, but not insurmountable for newer funds.

Reaffirm or revise the investment process

The Investment Committee is accountable for reaffirming or revising the structure of client portfolios. Risk, asset allocations and fund changes are approved by the Investment Committee. Any actions arising from portfolio revisions will be undertaken, with any fund changes agreed with clients at the next annual planning meeting.

The next time you view your latest valuation, remember that despite the lack of activity on the surface, the Investment Committee continues to paddle furiously behind the scenes to allow this be the case.