The Investment Consulting service is oriented towards professional institutional investors: mutual funds, hedge funds, asset managers, pension plans, endowments, depositary institutions, private banks, family offices, insurance companies (life, property, casualty and health) and treasury departments of corporations, municipalities and government agencies. It delivers performance improvements in the areas of investment policy, asset allocation (strategic and tactical), securities selection and activity (shift to more active strategies)
Recent advances in finance, information technology and data management have transformed the investment management process and lead to the proliferation of investment strategies, styles, instruments, electronic front-to-back platforms, and more international diversification, and global investments. The current zero interest rate environment is characterized by decreasing fixed income returns and factor premiums, increased uncertainty (volatility of volatility), where many traditional passive and index strategies are generating low or even negative returns. In this environment, our service helps institutional investors with cross-functional engagements in the areas of: (1) asset allocations and securities selection processes to improve diversification, returns and their consistencies – to identify, explore and select opportunities in traditional (fixed income, equities, derivatives) and alternative investments (hedge funds, liquid alternatives, derivatives, real estate) in both developed – US, EU (Core and Peripheries), and selected emerging markets – Central and Eastern Europe, Russia, LatAm and GCC; (2) technological and methodological improvements by enhancing data-processing, electronic trading and portfolio management processes to reflect strategic multi-asset views and improving the abilities to express these views efficiently (e.g., designing factor investing strategies with positive cross-asset carry); and (3) automated portfolio factor analysis and risk management solutions are also offered.
Our service focuses on factor-based portfolio construction and insurance to reflect bespoke investment strategies (passive, active, alternative, and liquidity solutions) with exposures to specific investment factors as well as tail-risk hedging strategies. Factor exposure can be obtained and managed efficiently with ETFs, notes, certificates, warrants or derivatives. It entails portfolio management improvement – optimizing the usage of datasets, performance attribution, developing and managing exposure to risk factors, optimizing the usage of enterprise datasets. We also help in creating, backtesting and optimizing bespoke investment strategies, focusing on multi-asset solutions and usage of derivative overlays for both active and passive portfolio management. In the passive space, the low costs, transparency and consistency of index investing are enhanced by moving from traditional market-capitalization based weighting to smart and alternative beta strategies and portable alpha strategies. We help with analysis and implementation of new equity and fixed income smart beta strategies, enhancing return and decreasing the risk of indexed portfolios.
For life insurance companies and pension funds distributing retirement savings products, the Investment Consulting service helps with the design and development of new products (selection of index benchmarks, term sheets), and improvements of marketing and distribution processes. We also consult our clients on hedging strategies and solutions for mainstream products for both defined contribution and defined benefits schemes such as variable annuities, index annuities, indexed universal life and target date funds in the US market as well as unit-linked life insurance products in the EU.
Our Investment Consulting service entails quantitative, structuring and risk advisory for portfolio management and investment strategies (single asset or multi-asset). We develop and implement quantitative model/product libraries for evaluation of assets in the portfolios and the derivatives overlays using standard software packages – Matlab, VBA, Bloomberg, Numerix. Investment strategies are also evaluated and tested with these packages, but occasionally the MetaQuotes Language 4 is used. We provide quantitative advisory with software systems of vendors such as Murex, Calypso and BISAM. We help on measuring and evaluating performance and on risk measurement. Solutions on managing the risk profile by using delta one, leverage or protection overlays are also provided. The execution of strategies with futures and options depends on the clients’ access to organized exchanges and their clearing services.
The Investment Consulting service offers cutting-edge technologies and methodologies for exposure management, breaking down exposure of a portfolio to systematic factors and idiosyncratic components. It introduces sophisticated Monte Carlo-based economic scenario generation hybrid cross-asset framework based on factor analysis and featuring co-dependence of risk factors and tail-risk. This allows for overlays and for expressing optimally specific views by using liquid alternative investments, derivatives, indices, trading strategy indices, ETFs, Delta-one certificates and funds. It includes creation, back-testing and optimization of multi-asset investment strategies and tail-risk hedging solutions. The investment management process is enhanced by extensive use of derivatives as stand-alone strategies or overlays to existing portfolios. Having a clear view on performance attribution allows for reducing (eliminating) undesirable exposures. Capital protection overlays are implemented by using specific rules and the models can be integrated with clients existing IT infrastructure.
Companies can elect whether they just require Appleton Greene for advice and support with the Bronze Client Service, for research and performance analysis with the Silver Client Service, for facilitating departmental workshops with the Gold Client Service, or for complete process planning, development, implementation, management and review, with the Platinum Client Service. Ultimately, there is a service to suit every situation and every budget and clients can elect to either upgrade or downgrade from one service to another as and when required, providing complete flexibility in order to ensure that the right level of support is available over a sustainable period of time, enabling the organization to compensate for any prescriptive or emergent changes relating to: Customer Service; E-business; Finance; Globalization; Human Resources; Information Technology; Legal; Management; Marketing; or Production.
The primary mission of the Investment Consulting service is to produce efficient investment portfolios by aligning investments with institutional investor’s business strategy in order to fulfil the corporate vision for optimum success. This mission is accomplished through collaborative efforts of the investment consultant (Dr. Valchev) and client personnel (portfolio, investment and risk managers, fundamental researchers, technologists and traders). Core emphasis is placed on realizing enterprise benefits through investment management alignment and integration within the broader enterprise business strategy (expanding the investment portfolios to include exposure to new investment opportunities – investments in new geographies, new instrument classes and strategies, all done in an efficient and transparent way). Potential benefits include (but are not limited to) business value, returns on investments and assets (ROI, ROA), improved risk management, total cost of ownership (TCO), top and bottom line financial results, change management, investment management process improvement, customer, investor and employee satisfaction (CSAT, ESAT) and retention.
The vision of the Investment Consulting service is to see clients improving risk and return, attracting more capital and leveraging technology investments for maximum business value returns through optimum service performance. Specifically, our aim is to improve the investment process, by expanding the investment universe and delivering exposure to the desired risk factors in a direct way and enhancing returns. It offers increasing transparency and clear view on return attribution, improving the abilities to express optimally specific investment views and optimizing the risk-management process. The Investment Consulting service allows for implementing portfolio insurance at times of market uncertainties, thus, reducing volatilities of portfolio returns. This insurance can be overlaid against an existing portfolio or a new portfolio can be constructed which may have embedded insurance. One end result is improved monitoring and managing the exposures to risk factors.