Talents Pick-up

In this way the Edmond de Rothschild Group creates pools of talent that we can draw on to build funds of funds. These make it possible not only to spread risk but also to capitalise on the distinctive characteristics of each underlying vehicle's strategy and manager style. The weighting of individual funds is moreover carefully considered.

Over the past four decades the Edmond de Rothschild Group has continually expanded the human and technical resources we dedicate to managing, administering and marketing our funds of funds.

All these tasks add up to a full-fledged business requiring integrated specialist teams: analysts and managers to choose and allocate the underlying funds; legal advisers to handle certain due diligence procedures; and back-office staff to deal with subscriptions, redemptions, high-water marks, hurdles, the equalisation factor and other complex specifications. Finally, fund-of-funds research and tracking requires special software that in our case we have mainly developed in-house in view of the intricacies involved as well as our own demands. The three indispensable stages of fund-of-funds management.

Fund picking (due diligence)

Each of the funds in our multimanager products has been carefully screened thanks to a long process of due diligence. This is based on qualitative as well as quantitative criteria and of course involves scrutinising the fund's track record, using leading-edge IT tools and our own detailed database.

But we also consider the experience and personality of the manager and the fund's legal and organisational structure. Perhaps most important of all, we try to gauge the fund's ability to remain within certain parameters in future.

Monitoring

Once a new vehicle has been added to one of our funds of funds, a process of monitoring begins that will include periodic reviews. We ascertain whether the fund is living up to the standards it displayed in the past.

Is it still performing well? Is the manager as professional as ever? Is his strategy still adapted to the constantly changing markets?

Asset allocation

Besides selecting and monitoring funds, the fund-of-funds manager has another important role to play. He must decide what allocation, or weighting, is most appropriate for each fund included in our multimanager vehicles.

The aim of this exercise is to ensure that the risk/return ratio of the resulting portfolio will comply with the guidelines that apply to it. Each fund is therefore analysed from the point of view of its risk profile and the value that it adds to the fund of funds.