Investment philosophy

We focus on identifying the best managers with whom we aim to develop genuine partnerships, while at the same time remaining true to our philosophy of independence and risk management. The performance of the professionals we select is reviewed on a monthly basis and we arrange regular on-site visits throughout the year.

The cornerstone of the selection process is our ability to take into account qualitative and quantitative data, the main aim of which is to identify the managers who are able to deliver outstanding performance, irrespective of the trends on the financial markets.

The research conducted by the Pictet Alternative Investments (PAI) team also allows us to identify the best-performing managers among their peers, and of all the managers we meet, less than 5% are actually selected. For us, tracking managers also implies extending our network and searching for new talent.

Controlling and monitoring investments
We permanently monitor the investments our clients make in our products. This entails regular meetings with the fund managers and continuous risk analysis at all levels.

Portfolio and fund analysis
When we meet one of our managers, the portfolio is analysed, in order to assess the strategy's potential taking into account the current and future economic situation. Where necessary, experience has taught us to recognise a number of signs that would prompt us to take a more in-depth look at the investment. For example, a slow-down in the flow of information, a fall in transparency or even the departure of key employees would prompt us to review the manager.

Quantitative analysis
A quantitative analysis of the fund is also carried out, by comparing a series of monthly performances with that of the peer group (or close competitors). Every month, an analysis of similar funds is performed to identify any disparities between the managers.

We also draw on multi-factor models to analyse the managers, using a method known as return-based style analysis or RBSA.

Overall, this aspect highlights the fact that in spite of an in-depth analysis prior to all investments, PAI must ensure that the manager remains true to his investment style and that he abides by the agreed risk profile.

Recommended funds
Depending on your financial and investment objectives, we recommend a comprehensive list of funds, which is reviewed by our Investment Committee on a monthly basis.

Our managed clients enjoy the fruit of this endeavour in the form of a list of recommended funds which is published every month.

Our methodical approach to asset allocation takes into account a broad spectrum of qualitative and quantitative factors from a number of complementary sources. At present, depending on the funds selected, several asset allocation strategies can be combined. They take into account the main drivers of performance and risk.

Aware of the importance of the portfolio construction process, we have developed several analytical tools for use by our managers. We have specialised in constructing portfolios that correspond to a range of risk profiles, regardless of the market situation. Our approach is therefore both highly structured and very flexible.

Tailor-made portfolios
We offer our managed clients a tailor-made service. A tailor-made portfolio, drawing on a multi-dimensional analysis, can be constructed to meet the specific requirements of our managed clients.

Aware of the importance of the portfolio construction process, we have developed a unique distribution model which relies on a multi-dimensional analysis method.

We attach great importance to offering our clients a tailor-made service by constructing portfolios that are made-to-measure and adapted to their specific expectations and risk profile.

The advantage of this multi-dimensional approach is highlighted in the case of alternative funds, as they refer to a host of detailed and complex information. Our objective is to take into account all the quantitative and qualitative variables when constructing the portfolio.

The fruit of this work can also be seen in the range of funds of funds we offer our managed clients, and which is available to external clients through Pictet Funds' distribution network.

It is also crucial to identify and understand the overall risks associated with each strategy, as the established measurement methods do not necessarily take into account the potentially complex exposure of the different types of funds. Every investment strategy can be affected by two significant types of risk, namely credit risk and market risk.