Australian Fund Managers

Table of Contents

1. Introduction 3

2. Case Study Scope 3

3. Qualitative Analysis 3

3.1 Fund Characteristics 3

3.1.1 Fund Managers Overview 3

3.1.2 Analysis of Nature of Fund Managers 5

3.1.3 Analysis of Strategy and Industry 5

4. Quantitative Analysis 6

4.1 Objective 6

4.1.1 Fund Selection: 6

4.1.2 Funds and Benchmark 6

4.2 Part 1 - Selection of one best fund 6

4.2.1 Analysis of Risk-Return 6

4.2.2 Analysis of Ratios and Measurements 8

4.2.3 Conclusion 10

4.3 Part 2 – Blending of the five funds 10

4.3.1 Concept 10

4.3.2 Analysis of Correlation 10

4.3.3 Analysis of Tracking Error 11

4.3.4 Conclusion 13

1. Introduction

Fund Manager Selection is the first and most important step when implementing an investment process. The search for the most skilled managers and determining of the proportion of investment allocation to different fund managers is done through conducting due diligence. However, despite all the screening to be performed, the most crucial factor would be to ensure that the nature and strategy of the fund managers are aligned with the mandate it be set by the client. Hence, there are various ways in selecting the most suitable fund manager, via qualitative and quantitative measures.

For investment purposes, we should create an 'Optimal Portfolio', and the strategy implemented will be decided in the mandate. Key factors to be highlighted in the mandate would be investors' expectations of excess returns over benchmark, their risk appetite and their comfort level on the fund manager's level of aggressiveness.

2. Case Study Scope

We have a choice of 5 fund managers, Lumiere Asia Value, Polar Capital Asian Financials, Pedder Street Asia Absolute Return, Arisaig Asia Consumer and Kelusa Master Fund.

Firstly, based on qualitative of the funds, we will be focusing on various characteristics of the fund. As for the quantitative portion, it will be based on the performance and the risk appetite of the fund manager. Our aim is to obtain the...