performance monitoring
Investment Analytics conducts quarterly reviews as defined in the Investment Policy Statement. Separate from this, we continuously monitor the program from both a quantitative and qualitative approach.
Quantitatively, we look at asset class performance against benchmarks and against other ways to meet your goals. We take all the possible combinations of issues in an asset class and rank them against your asset class performance.
Qualitatively, we maintain communication with all managers, fund groups and custodians, and monitor these for any personnel or philosophical changes that might affect performance. This gives us information we can use proactively in advising clients.
Investment Policy Analysis
The single most important element of a well-constructed investment program is the Investment Policy Statement (“IPS”). The IPS creates the foundation from which fiduciaries guide the program. It outlines goals, benchmarks, asset allocation policy, evaluation guidelines and overall program structure. The IPS guides fiduciaries through the necessary process of continuous oversight in the appropriate time-line.
The IPS also provides a structure for perpetual programs as Boards and Trustees change. This single focus - through good markets and bad - has the effect of increasing probabilities of achieving program success.
Asset Allocation Modeling
Asset Allocation Modeling is the process of defining the structure of an investment program (initially, in a broad sense – and later, very specifically) by examining the combination of assets that has the highest probability of meeting the needs of the investment program.
Goals, as defined by return objectives, spending needs, risk parameters are defined in the IPS. How to achieve these goals is defined by the asset allocation. We model different ways to do that using simulations that are back-tested and given probability rankings.
Asset Allocation Policy is reviewed continuously and adjusted accordingly. It becomes part of the Investment Policy.
Probability Analysis
When allocations are modeled for a program, each asset allocation is given a probability of meeting goals over a period of time. Since each program is different, acceptable levels of probability are different. Also, market returns over time will change probability, so this needs to be modeled continuously to maintain the program within acceptable parameters. This is part of our continuous evaluation.
Program Design
No two investment programs are alike, and the design is driven by Investment Policy. Investment Analytics, Inc. will recommend based on extensive analysis and fiduciary participation an active or passive approach to each asset class. Whether it is more appropriate to passive benchmark, a fixed income element, or search for active management of a small cap allocation, Investment Analytics has extensive experience with both. We will ensure an extensive due diligence approach to finding the appropriate managers or passive benchmarks.
Performance Monitoring
Investment Analytics conducts quarterly reviews as defined in the Investment Policy Statement. Separate from this, we continuously monitor the program from both a quantitative and qualitative approach.
Quantitatively, we look at asset class performance against benchmarks and against Performance Opportunity Distributions (PODs). POD rankings take all the possible combinations of issues in an asset class and rank them against your asset class performance.
Qualitatively, we maintain communication with all managers, fund groups and custodians, and monitor these for any personnel or philosophical changes that might affect performance. This gives us information we can use proactively in advising clients.
Program Evaluation
We measure performance both from an absolute perspective and comparatively. We monitor and report all program costs and work diligently to reduce cost where possible. We provide written reports to fiduciaries at least quarterly (and usually more often). At Investment Analytics, Inc., we document everything we do and provide that documentation to clients. We are proactive – not only to ensure performance of the assets but also to make sure fiduciaries complete every task required at a level beyond the minimum. We have found that this level of diligence is the best way of ensuring the success of the program.
