Step 1:
Investment Objective Review & Objective Setting
The key to TAM's investment process is ensuring that, from the outset, every client has a realistic idea as to what they can expect from TAM. Therefore, before signing up to their services you must ensure that you have established an accurate investment objective with your intermediary. This will form the cornerstone of how TAM manages your assets.
Investment horizons can change however, and they will be affected by your personal circumstances. TAM recommends that, if your goals or circumstance change, you inform your financial adviser immediately and re-evaluate your portfolio to ensure it is balanced and in line with these changes.
As each investor's objective and risk profile may change according to circumstances, TAM also recommend that these are re-evaluated continually.
Step 2:
Investment Strategy Formulation
Once TAM has been informed of a client's investment objective, they will propose an investment strategy that is most aligned with those requirements and objectives. Their investment strategy will include both asset and security selection proposals.
Step 3:
Asset Allocation
TAM says asset allocation is a medium to long-term process designed to capture more macro-economic determined events through investing in asset classes that they expect to appreciate and withdrawing from those they expect to decline.
For example, investing in equities in 2007 (and not bonds) would have been beneficial, as opposed to 2008 when an emphasis on bond investment (and not equities) would have proved a more successful strategy.
In other words, they try and guess and time the market...
TAM says they attempt to ensure that the asset allocation of the portfolio between the various asset classes (shares, bonds and cash, etc.) is continually managed according to the changing economic cycles and financial markets. However, this process is always managed in accordance with the investment mandate and corresponding risk profile. During certain phases of the economic cycle, asset allocation is the most effective method of maintaining the performance of portfolios - allegedly, according to TAM. Of course, we beg to differ!
Step 4:
Fund and Security Selection
TAM admits: "It is obvious that no single Investment Company or Portfolio Manager can be a top performer in respect of every geographic region or different type of asset class."
To try and get around this they consider a multi-manager approach to any investment portfolio and choose specialist managers for differing investment disciplines.
They prefer to diversify amongst known specialists with proven track records. Where appropriate, they may also hold discrete investments in individual securities, if both the portfolio type and risk profile warrant it.
They say the advantage of this diversified approach is that portfolios will be exposed to the investment styles, strategies and positioning of different, often top, investment specialists. This reduces the risk profile of an investment portfolio, in TAM's opinion, as, should one investment house misread the market, it has less chance of having a negative effect on the entire portfolio.
Of course, you could ditch the entire active management/crystal ball appraoch entirely - but then, TAM wouldn't be the right DFM for you!
Step 5:
Performance Monitoring and Review
Each portfolio is individually benchmarked in accordance with risk profiling and is monitored and reviewed by the Investment Team at TAM on an on-going basis. Each individual Fund investment is also checked for any style shift within the strategy employed to ensure that the continued management is in line with our expectations.
TAM says it continually monitor for any deviation from performance expectation against peer group and within strategy to ensure, as far as possible, that the underlying Managers do not take actions that may impinge upon their ability to generate on-going satisfactory returns.
A more formal review is also regularly undertaken by our Investment Team...
