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Morningstar Investment Management South Africa in association with Resolute Wealth Management Investment Philosophy Document

Resolute Asset Management (Pty) Ltd (FSP 48269) and Morningstar Investment Management South Africa (Pty) Ltd (FSP 45679) are authorised Financial Services Providers.

Who is

Morningstar Investment management south africa

Morningstar Investment Management South Africa (Pty) Ltd is part of the global Morningstar Investment Management group, which offers investment advisory services around the world. As an entity licensed with the Financial Sector Conduct Authority, Morningstar Investment Management South Africa has established an investment practice in South Africa to provide research-driven, innovative and independent investment services to the local market.

Morningstar Investment Management unites the strengths of Morningstar, Inc. with more than three decades of investment experience to help advisers empower investors to meet their financial goals.

Through its global presence, Morningstar Investment Management brings together a rich heritage of local investment-management expertise and experience to craft solutions that cater to the unique requirements of each market.

The investment professionals in South Africa use their knowledge of local markets to help design and manage investment solutions. The South African investment professionals have, on average, more than 10 years of industry experience.

Additionally, their work draws on the research, data and analysis from Morningstar, Inc. Morningstar, Inc. has served South Africa through its Cape Town office since 2009 and is known industrywide as a trusted source of independent investment information.

What sets Morningstar apart from other companies is that they offer independent investment management services, software, data, research and ratings; and they combine and deliver them all in whichever way their clients prefer. The global research team consists of more than 100 analysts based around the world and their proven track record has resulted in global assets under management exceeding $200bn.

This comprehensive global investment process brings together their strengths in proprietary research, patented methodologies, investment techniques and manager selection. It provides the framework they use to create solutions that address the challenges clients encounter and the varying goals and risks investors face over a lifetime.

Morningstar Investment Management South Africa

Team Organogram

Never invest in a business you cannot understand.

– Warren Buffet – 

why

Model Portfolios

The legislative environment and investment industry is complex and that pace of change makes it a challenge to focus on running a business that is client-centric, while staying on top of the more technical and administratively cumbersome parts of managing an investment capability. Combine it with the fact that there are thousands of registered unit trusts to choose from across the globe, complicated pricing models and ever-changing markets and the task is even more daunting. This translates into a challenging portfolio construction process, hence the decision to partner with Morningstar Investment Management.

Together we have established a range of investment portfolios that will facilitate the active management of our clients’ portfolios. This follows a strict process whereby investments are managed by an Investment Committee of specialists with proven track records. In their selection of unit trusts, the investment committee aims to achieve an appropriate degree of diversification while combining the investment expertise of quality investment managers.

All portfolios are subjected to rigorous qualitative and quantitative analysis when selecting underlying unit trust funds. The portfolios are managed to meet the needs of end-investors while taking the investment landscape into account.

Model portfolios provide you with many benefits in terms of flexibility, liquidity and transparency.

Morningstar negotiates reduced fees on the underlying funds where possible to ensure that our clients benefit from cost-effective portfolios.             

Investment Philosophy

Invest for the longterm

Morningstar offer portfolios designated to stand the test of time. That means investing with patience and the confidence that comes with rigorous research and careful diversification. It also means tuning out the short-term noise that distracts many investors, impeding their chances of reaching their goals.

Sensitive to costs and taxes

Morningstar appreciate the importance of minimising expenses and use low-cost vehicles, including index funds, whenever possible. They also take steps to avoid transaction costs and taxes, either by favouring managers who trade infrequently or refraining from transacting themselves.

Independent Thinkers

Morningstar do not play favourites or allow external factors to cloud our judgement when they’re making investment decisions. Instead, they follow their in-house research wherever it leads them, even if it means taking a position that falls outside of the mainstream.

Invest clients’ money as if it were their own

This properly aligns their interests with investors’ and ensures that they only offer strategies in which they have the utmost confidence.

Employ a disciplined, consistent investment process

Because there are no shortcuts to a good investment outcome, Morningstar follow a well-defined process that joins quantitative analysis with qualitative research. Every security they evaluate must pass this exacting test before they will invest in it.

Communicate in a timely and candid fashion

Morningstar strive to clearly explain their approach and investment decisions. They also aim to provide complete and transparent accounting of our investment performance. This includes admitting to any errors made in managing portfolios and lessons learned along the way.

Actively manage portfolios

Through disciplined asset allocation and incisive research, Morningstar add enormous value for our clients. Thus, they leverage their deep analytical resources in constructing portfolios and selecting securities. They believe this will yield better outcomes than a purely passive approach.

our

Approach

Morningstar’s disciplined investment process drives portfolio construction. It is imperative that the risk, return and time horizon objectives of clients are correctly analysed and matched to investment managers. Portfolios are subject to both a qualitative and quantitative due-diligence process which allows Morningstar to identify and select only the best quality unit trust funds for our clients’ portfolios.

Don’t judge each day by the harvest you reap but by the seeds that you plant.

– Robert Louis Stevenson – 

Asset Allocation

Asset allocation is the primary driver of both investment performance and portfolio risk. Asset allocation is the process of allocating a proportion of investment capital to the various asset classes, namely equities, fixed income, property and cash, both in South Africa and offshore. Each asset class has different risk and return characteristics and diversification benefits can be achieved by selecting a mix of the most appropriate asset classes.

Each portfolio is managed to ensure it meets the correct standard when assessed against the risk tolerance of an end-investor. This allocation is monitored on an on-going basis to maintain each portfolio’s risk and return profile. In addition, the investment committee monitors the fundamental characteristics of specific investments with a view to determine whether asset allocation changes are necessary. Underlying managers have the flexibility to move between the various asset classes based on current market conditions.

RISK MANAGEMENT ASSUMPTIONS

When constructing portfolios, specific guidelines are considered to decrease the risk in the portfolio. Limitations are set on the number of funds, the minimum size of the fund, the allocation to a single fund and the allocation to one management company.

Morningstar strongly believes in portfolio consistency. Therefore, when they believe in the investment style and philosophy of an asset manager, they construct portfolios with building blocks across all models, moving up the risk profile range of that specific management company where possible.