Sarasin & Partners has engaged Distribution Technology to profile three of its key balanced funds: Sarasin Global Diversified Fund of Funds, Sarasin Global Equity Fund of Funds and Sarasin IE GlobalSar – Income Fund.
The move is designed to assist independent financial advisers and discretionary managers determine levels of risk and match fund risk profiles with their customers’ requirements.
Each of the funds has its long-term strategic asset allocation profiled. The riskiness of a fund over the long term will depend on, among other things, the level of flexibility in a manager’s mandate and how far the fund is able to deviate from the strategic position and for how long.
The Distribution Technology Dynamic Planner Application measures risk by estimated volatility using a fund’s internal asset allocations and estimates of the returns, volatilities and correlations of the Distribution Technology (DT) primary asset classes. The analysis assumes that the actual holdings in each asset class can be broadly represented by the benchmark adopted for that asset class.
The DT risk profiling system profiles funds from one to 10 on the volatility scale, with 10 being the most volatile. Over GBP44bn of assets from over 30 managers are now run with reference to this model or profiled against its risk profiles (as at 30 June 2012).
The following DT profiles have been applied to the funds:
Sarasin IE GlobalSar – Income Fund: risk profile three
Sarasin Global Diversified Fund of Funds: risk profile five
Sarasin Global Equity Fund of Funds: risk profile seven
Andrew Thompson, head of wholesale at Sarasin & Partners, says: “We recognise the increasing importance attached to respected third party risk profiling of funds and the reassurance this provides to clients of financial advisers when calculating and recommending the suitability of different funds. We have been impressed with Distribution Technology’s thorough risk assessment process and are pleased that advisers can now add this useful tool to their own assessment of our funds. We are able to offer portfolios from risk level three to risk level seven inclusive.”
Phil Morse, director of asset management clients at Distribution Technology, says: “We are delighted that Sarasin & Partners has chosen to risk profile these popular portfolios with us. Fund managers are looking for opportunities to support advisers and demonstrate that their client portfolios and portfolio holdings are ‘suitable’. When we risk profile investments, we look at a number of things such as volatility, performance, strategic and tactical asset allocations. On average, 80 per cent of the profile is based on quantitative measures, whereas 20 per cent is qualitative. We then review each risk profiled fund on a quarterly basis to ensure that it remains accurately positioned within Dynamic Planner.”