OUR INVESTMENT PHILOSOPHY
At Butterfield, our heritage provides a firm foundation on which our asset management philosophy is built. With a commitment to communication, transparency and accountability we pride ourselves on being completely focused on your requirements. Our investment process is designed around you, to not only deliver the results you expect, but to do this in a way you understand and are comfortable with.
An integral part of this approach is the time we spend with you building a thorough understanding of your needs and expectations. Your clearly defined mandate will be closely aligned to this requirement. We can then ensure you understand the investment process, permitted assets and related risks we have constructed your portfolio around. From these discussions we can ensure that portfolio outcomes will be in line with your expectation and therefore diminish the likelihood of unwelcome surprises in the future.
Our Asset Management team is organised to ensure the right level and blend of expertise, experience and responsibility are present at all stages of the investment process. The Research and Strategy teams are centralised to deliver the maximum amount of analysis and insight to the wider investment team. This dedicated capability not only delivers support to our Investment Managers, but facilitates their direct involvement in every aspect of the investment process. You will have direct access to your appointed Investment Manager who will be responsible for your portfolio and its development.
Our investment process begins with a focus on the wider world. We consider factors such as the geopolitical outlook, expectations for economic growth and inflation, and the identification of attractive long-term strategic themes. Our prudent approach means we look to establish a framework that benefits from growth themes whilst minimising potential exposure to more problematic areas. At the end of this stage, we will have established our policy and an outline for portfolio construction in terms of overall asset allocation for varying levels of risk appetite, duration and credit quality in fixed-interest allocations, and our positive/ negative themes in equities.
The next stage is to ensure we identify the best solutions available in the defined segments - Equities, Fixed Interest and external funds. This input is primarily established by our centralised Core Strategy and Research team. Their research provides us with the tools to craft a list of our favoured equities, bonds and funds.
To complete the process your Investment Manager will utilise this information, and in combination with their insight and knowledge of your requirements, an appropriate and relevant portfolio will be created for you. The portfolio will include funds, direct bonds, direct equities or index trackers that have been selected on their relevant merits and alignment to your requirements and preferences.
Our investment process is formed through our specialist Investment Councils which meet on a monthly basis. Through these meetings, internal and external analysis is shared and discussed, prompting in-depth debate. The range of views discussed is often subject to rigorous and spirited peer review. Each council has a specific objective and defined roles, but wide participation works to avoid the loss of personal accountability and responsibility that can be common in similar structures.
Investment Policy Council - The Policy Council meets to discuss and establish our policy on important areas such as the macro-economic outlook, risk appetite, and investment strategy. These are then translated into outline asset allocation structures for a range of risk appetites.
Equities Council - The Equities Council meets to discuss the ‘Recommended List’ of direct equities. From this list, the Equities Council then decides on which stocks will be used as the building blocks when constructing Global and UK equity portfolios.
Funds Council - The Funds Council meets to discuss and establish the ‘Recommended List’ of external Funds for relevant sectors and regions to support Investment Managers in subsequent portfolio construction.
Fixed Income Council - A principal output of the Fixed Income Council is to establish a single consolidated list of approved Credit issuers. They also provide guidance on the macro-economic outlook (including an assessment of the High Yield and Emerging Market debt opportunity sets to determine risk appetite), and duration and credit strategy, to support and inform discussions and decisions in the subsequent Policy meeting.
Our Senior Management team at Butterfield Asset Management form our Investment Committee. They are responsible for providing oversight, governance and challenge on all aspects of the investment process, current strategy and performance. It is the responsibility of the Committee to ensure the investment proposition is robust, credible and meets with our business’ objectives and those of our clients. Our Investment Committee meets quarterly, and is chaired by Michael Neff, Executive Vice President and Head of Group Asset Management.
Risk management reviews are conducted quarterly at jurisdictional level, examining the following relevant variables:
- Asset allocation - vs. mandate and Policy
- Performance - vs. benchmark
- Non-standard holdings
- Account activity