Skandia Investment Group

Our 4P process

We seek to identify managers that we feel will deliver superior performance. To do this we concentrate on the four fundamental cornerstones of our research process — the 4Ps:

philosophy

What is the manager's approach to value generation? Does the investment manager understand the market's inefficiencies and how to exploit them?

This is how the manager is seeking to add value. It is not a simple description of philosophy in conventional terms — by growth or value for example. We are looking for a clearly defined philosophy and evidence that it will generate outperformance by being predictive of future share or bond price movements. The stated philosophy must also be suited to the manager's experience and skill sets.

process

How does the manager implement their philosophy to generate added value? A manager's process demonstrates their practical approach to:

research
country allocation
industry sector selection
portfolio construction
implementation of strategies (eg thematic investing)
risk control

We consider every stage of the process — from idea generation to risk control — in detail, to fully understand all aspects of the manager's process. We are looking for discipline, repeatability and consistency with their philosophy.

people

Are the people sufficiently skilled to implement the philosophy? Do they believe in and operate in accordance with the philosophy?

We look for skilled individuals and teams who not only understand investment theory, but also understand the real world dynamics of the markets in which they operate. We also look for the right 'soft' qualities to excel in their role, to learn and develop as the world changes, and to get the most out of the resources at hand.

Transparency is an important consideration — they have to be open with us if we are to reach an opinion. We are interested in all the people who have an impact on the portfolio, not just the lead portfolio manager.

Organisational issues are also considered here, as the environment in which the manager operates must encourage effective portfolio management.

performance

Performance is evidence of the investment approach, and of levels of manager skill.

We are interested in understanding performance to test our understanding of the manager's approach and assess whether the manager is skilful or just lucky. This requires in-depth analysis of:

absolute and relative performance patterns
source of performance over time
portfolio positioning and trade analysis
the manager's future investment strategy for back testing at a later date

Only managers that meet or exceed our high expectations on all aspects of the 4P research process may be assigned a 4P approved rating and be considered for potential inclusion in our 4P approved fund list.

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Skandia Investment Group is a trading name of Skandia Investment Management Limited. Skandia Investment Management Limited is registered in England & Wales under number 4227837. Registered Office at Skandia House, Portland Terrace, Southampton SO14 7EJ, United Kingdom. Authorised and regulated by the Financial Services Authority with FSA register number 208543, VAT number 386 1301 59.