Automated restriction monitoring is a key part of the risk control framework and is monitored Ninety One’s Investment Guideline Management (IGM) whose members are experienced operations staff (therefore they are independent of the investment teams). Portfolio guidelines and clients’ investment restrictions (for discretionary mandates) are recorded by IGM on the trade order management system, thinkFolio. ThinkFolio allows portfolio investment restrictions, where possible, to be ‘coded’ into the system and aims to ensure that, before any deals are completed, portfolio limits are identified and breaches avoided. Investment restrictions are checked automatically both pre and post trade execution.
Pre-trade messages warn portfolio managers of potential breaches. According to the nature of the rule that has been coded into thinkFolio (e.g. absolute prohibition of a particular security, or limit as to how much of a security may be held in relation to total portfolio market value), the portfolio manager is then either prevented from taking the transaction any further, or asked to annotate a reason for proceeding with the trade. Post-trade reports are monitored daily by IGM.
Any breaches that do occur are forwarded to the Compliance and Operational Risk teams for review and a decision on the action required to rectify and also for inclusion in the central breach register. The IGM, Compliance and Operational Risk teams liaise closely to ensure any breaches and errors are resolved as soon as possible. They will also liaise with relevant key individuals from other teams (e.g. client relationship individuals). It is Ninety One’s policy to ensure that clients are not disadvantaged as a direct result of an error or omission on Ninety One’s part.
Our investment teams also attend Structured Report Back which is a quarterly forum whereby senior management (including the Co-Chief Executive Officers, Co-Chief Investment Officers and Head of Investment Risk & Performance) meet with the investment teams to discuss and challenge on the investment process, focusing on performance, portfolio construction, investment philosophy and process.