You turn the tap. You expect water to come out. When it’s chilly you switch on the central heating.
It’s only when these things stop working that you realise how tedious life can be without them. And heaven forbid you have a major fault, a leak somewhere upstairs but you’re not sure where. It’s a bit like that with fund management. By the time it becomes obvious you have a problem – you really do have a problem.
For all their apparent simplicity, the True Potential Portfolios are a complex interplay of differing investment styles and ways of managing money. Encompassed within the portfolios are UK and foreign government treasury bonds, corporate bonds issued by both domestic and international companies, direct equities, unit trusts/OEICs and other collective investment schemes, futures contracts, currency instruments, commodities and property.
Making sure that amid this myriad collection of asset types there aren’t any that could unexpectedly become a major problem is something we take very seriously. It’s our job to ensure that this intricate blend of investments operates as efficiently as possible and provides the diversification we see as a vital element of effective investment management.
True Potential has direct access to the leading managers we employ to bring their differing style approaches to our portfolios and we have full visibility of what they do. We can challenge them at any point around liquidity or any other aspect of their management of our funds. We hold formal monthly meetings with each of them followed up by in depth analysis of what they are doing both individually and in aggregate.
The results of our monitoring are discussed at quarterly Investment Committee meetings in which the sub-fund managers are subject to expert external, independent scrutiny.
In terms of liquidity, the ease with which underlying investments can be sold, all our managed funds are subjected to monthly testing.
Our memories are long and we remember the direct property funds that were “gated” and where dealings were suspended during the 2008 financial crisis. Our property exposure is through listed commercial property companies quoted on the Stock Exchange which means we will never find ourselves holding an investment we are unable to liquidate. We also carry out additional monthly stress tests to simulate how our funds would perform were we to experience a major financial event such as the Russian debt default in 1998 or the collapse of Lehman Brothers in 2008.
Our Governance team has over 170 processes designed to check and challenge not only the sub-fund managers, but also our independent Authorised Corporate Director (ACD). This demonstrates our commitment to enhanced fund governance. Unlike others, we do not rely solely on the ACD to carry out monitoring but instead carry out our own checks aimed at spotting and tackling any issues early before they become a problem.
It’s our way of checking the water pressure and making sure there are no issues with the pipework.< Back to Blog