Dynasty's Investment Philosophy
Our Key Investment Principles
1. Client individuality
We accept and embrace the fact that each client has a unique set of personal circumstances, aspirations and a particular risk tolerance profile. Our philosophy is to implement solutions appropriate to individual contexts.
2. Process driven solutions
Our solutions are based on an in-depth investment process whereby each portfolio building block is researched and selected to provide optimum performance within clearly defined and acceptable parameters, such as risk, time and performance benchmarks.
3. Asset allocation
We believe that overall portfolio returns are primarily driven by asset allocation (i.e. the portfolio weighting to equities, bonds, cash, currencies and alternative asset classes).
4. The 'Active' vs 'Passive' debate
Much of our research is focused on identifying long-term winning asset managers who have delivered outsized returns when compared against their benchmarks, as well as having provided better risk and volatility metrics. However, we also recommend that the selection of active managers be complemented with passive funds which offer a credible low-cost building-block alternative within our portfolio construction methodology.
Dynasty's philosophy is, where appropriate, to intelligently combine the two seemingly opposed approaches so as to reduce overall portfolio costs via passive funds, whilst employing active managers who have mandated flexibility to take judicious action in terms of stock picking and asset allocation during times of market turmoil.
5. We are not individual stock-pickers
Dynasty selects its managers based on criteria such as their resources and capabilities, as well as their performance track record. Our research thus focuses on manager/product selection and monitoring, while individual stock selection decisions are left to the underlying managers.
6. Offshore investment
We believe that the decision to invest offshore should primarily be driven by the principle of risk diversification, as well as from the greater opportunity set that exists outside the South African market. However, due to the unpredictability of currency movements, we strongly advocate that the allocation of offshore assets be set at a prudent level, ensuring there is no future mismatch of currency-based assets to currency-based liabilities.
Our portfolio construction, at overall portfolio and individual product levels, incorporates building block selection which is likely to display uncorrelated performance at any given point in time, without compromising returns over the long-term. This philosophy proved to be prudent and effective during periods of market turmoil such as the Global Financial Crisis and the European Sovereign Debt Crisis.
Our investment philosophy is premised on our track record which demonstrates that in-depth research and appropriate portfolio construction result in optimal long-term outcomes.
Dynasty's Wealth Management Approach
Our approach is process driven and based on the following sound investment fundamentals:
1. We listen to our clients
Each client has a unique set of estate and retirement planning requirements, investment objectives and personal aspirations. We pay careful attention to individual contexts and listen very attentively to our clients’ needs. It is each client's specific individual profile which determines how we develop personalised financial planning and risk-profiled investment solutions.
2. Quality of advice
All investment advice is provided or endorsed at director level and is underpinned by our proven investment philosophy and rigorous investment process. If required, specialist advice (for example input on sophisticated estate planning and offshore structures) is sourced externally from our network of professional advisers as a value-add service to our clients.
3. Security of assets
We recognise our fiduciary responsibility in safeguarding the security of client assets. Accordingly, the custodianship of our clients’ domestic and offshore investments is handled by third-party administrators. In South Africa, our principal administrators are major institutions where the investments are held "off balance sheet", while some of the largest and most reputable trust companies in the world are utilised offshore.
4. Value system
Our value set is based on fairness, integrity, quality and personalisation. These values are applied throughout the business and extend to our clients, support team and service providers alike. Client interests are always placed first, and this philosophy has benefited the business over the long-term. Although we believe that close relationships with our service providers are beneficial to the business, we are also demanding and challenging in terms of service and performance levels, which are constantly monitored. Our independence ensures that changes to providers are made when necessary. Ultimately, we strive to be innovative and dynamic, but always within the constraints of the highly disciplined environment in which we operate.
5. Client service excellence
Dynasty is committed to providing each client with the highest level of personal service and investment administration. Our recruitment policy is based not only on normal criteria (such as skills, experience and qualifications) but also on the individual’s compatibility with Dynasty’s culture of attention to detail and the generally demanding needs of our client base. Our competent support team understands the importance of meeting client expectations, reinforced by a remuneration model that recognises client compliments. Client queries, workflow control, document management and investment reporting are all supported by proprietary or licensed business information systems.
6. Legal and compliance
We adhere to all areas of compliance within regulatory frameworks. Internal monthly compliance meetings are held which include updates on regulatory changes as well as random audits of client files. Particular attention is paid to adherence to client briefings as stipulated in our mandates, records of advice, transparency of fees and the electronic storage of client documentation.
7. Client contact based on individual requirements
The frequency and method of client communication is determined on a case-by-case basis. Circumstances and requirements vary from weekly calls to regular meetings set at pre-determined intervals, or on an "in-need" basis. At the very minimum, all clients receive a Quarterly Valuation of their investments under Dynasty's management, together with our Quarterly Private Client Newsletter.
8. Regular and meaningful investment reporting
Dynasty Quarterly Performance Reports include details of performances and transactions during the periods under review, as well as the provision of underlying Fund Fact Sheets. For clients requiring more detailed portfolio analysis, asset allocation weightings at both individual fund level and overall portfolio level are provided on a "look-through" basis. We recognise the complex financial structures which often pertain to high net worth individuals, and are therefore willing to accommodate any reasonable reporting request to enable such clients to analyse their portfolios, notwithstanding that certain investments may reside outside our management.
9. Client access to fund managers
Dynasty frequently hosts informal Investment Presentations at its offices which allow small groupings of clients to interact with their fund managers on a personal basis. Our "technically inclined" clients find such presentations to be extremely beneficial, as they gain insight into the management of their portfolios as well as direct, meaningful exposure to the managers of multi-billion portfolios, who would not generally be directly accessible to retail clients. Our fund managers are also available to present to larger groupings of clients on a more formal basis at our client functions.
Dynasty's Investment Process
Dynasty’s investment process has been carefully crafted over many years. We pride ourselves in ensuring that the process is rigorously managed, but that it remains sufficiently flexible to meet individual client needs.
The process begins with a general assessment of client requirements which are presented to an experienced, multi-skilled Investment Committee. The committee interacts frequently but meets formally on a quarterly basis to review portfolio performances, analyse economic research - both global and domestic - and to debate the outlook on various asset classes.
The scope of responsibilities of the Investment Committee also includes:
- A determination and review of the number of investment portfolios deemed appropriate to adequately address the investment needs of our clients.
- The formulation of detailed composite investment portfolio design documents that deal with the quantitative aspects of each portfolio.
- A portfolio risk and return monitoring process.
- A performance attribution program.
- Analysis of a comprehensive database of manager and fund returns.
- Maintaining an extensive qualitative database of documented information on the current (and possible future) managers.
- A manager due diligence program.
- Ensuring that all aspects of the investment process comply with the FAIS Act and other relevant legislation.
A feedback loop is in place that ensures the Dynasty portfolios and their characteristics remain relevant under changing market conditions and that they are able to match ongoing client requirements.
A key criterion for Dynasty is to have constant and direct access at the highest level to all the management teams that we utilise.
Adherence to our rigorous investment process has resulted in Dynasty clients having consistently experienced optimum returns accompanied by reduced volatility over the long term, when compared against each investment’s respective benchmark.
Dynasty's Fee Model
Dynasty adheres to a policy of fair remuneration aligned to client interests. Clients who have evaluated our fee structure on an ongoing basis have found our wealth management services, and net investment returns to be value-enhancing over time.
Our fee structure is simple, totally transparent and fully disclosed in our Client Mandates.
Fee structure components
Introductory meetings, initial planning consultations and the submission of personalised written proposals are free of charge.
No initial fees are applicable to funds placed under the management of Dynasty.
Importantly, Dynasty has negotiated a zero up-front fee with all its product providers and fund managers.Thus no transactional fees are incurred either on the take-on date or when switching funds from one investment to another.
Ongoing Management Fees:
An annual management fee as a percentage of the value of funds under management is debited monthly or quarterly to our clients’ respective investment accounts. This fee covers the management, administration, servicing and reporting functions, as well as ongoing review meetings based on each client’s specific requirements. Dynasty is acutely aware of the cost structures pertaining to many retail investment products and the drag effect this can have on portfolio performances. The net impact of our ongoing fees is - wherever possible - reduced though the discounted or institutional fee rate secured with our underlying fund managers. These arrangements result in a significant reduction in the aggregated costs which would otherwise be applied to clients’ investments.