Founded in the first half of the 90s, Symphonia SGR has managed to carve out space in Italy’s growing asset management sector.
Since 2003, Symphonia SGR has been under the management of Banca Intermobiliare di Investimenti e Gestioni and currently manages some €5bn, of which €1.3bn is in third party funds.
Fund of funds manager Fabio Caon and the multi-manager team of Symphonia explain that they look to both managed funds and managed accounts. And while the relevant qualitative and quantitative aspects of the selection process are important, the focus is on the qualitative analysis.
“We quantitatively analyse funds trying to understand the underlying investment process and we qualitatively construct our peer groups where indicators and performances are shown,” says Caon.
“We also arrange meetings, conference calls, web calls with portfolio managers, analysts and product specialists in order to have a deeper knowledge about the management team and to be updated on the fund house’s changes in strategy and philosophy.
“Finally we give a lot of importance to the portfolio manager’s track record and its consistency during bear phases.”
Although ideas for new funds tend to come from fund houses themselves during Symphonia’s periodical meetings, the multimanager team also becomes aware of new investment opportunities through newsletters, magazines and dedicated events.
“After a first screening has been made, we run two different approved lists of funds which differ by typology. The first one is for traditional long only funds, while the other one is for total return/absolute return funds,” Caon adds.
Although yields are close to negative territory in the fixed income area, Caon reports a persistent conservative and risk averse tendency among its clients.
“We see that our clients are more conservative and risk averse than in the past. They are mainly focused on flexible unconstrained bond instruments, or on multi-asset and total return strategies. We have a diversified range of products of this kind.”
“We also see interest in absolute return strategies from our clients, particularly in search of low volatility and decorrelation.
“For this reason, we have a non residual weight of such instruments, in particular as equity long/short or bond absolute return funds. All these instruments are Ucits compliant,” the fof manager
The multi-manager team at Symphonia SGR also believes that 2015 will be characterised by high volatility. To hedge that risk, they say they are currently considering smart beta instruments and trying to identify the main competitors and products in order to construct their internal peer groups.
As direct relationships with managers and management companies are highly appreciated by Symphonia SGR, the multi-manager team particularly values managers’ availability to arrange calls
or meetings, full disclosure and reporting by fund houses themselves.
When it comes to red flags “our monitoring activities will kick in if we come across the following situations: resignation or change of the portfolio manager, strong cash inflows or outflows, unusual volatility patterns especially regarding total return funds,” Caon explains.
Finally, companies with a global client base and a solid reputation are prioritised in the selection process, as well as those that keep the risk management team independent and separate from the portfolio management team.