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Prime Buchholz

Service Providers Framework 2019

You are in Investment Consultancy » Manager selection and monitoring

Manager selection and monitoring

IC 12. ESG in manager selection, appointment and monitoring

12.1. Indicate whether you incorporate ESG factors into your manager selection and monitoring services.

Manager selection service

Manager monitoring service

12.3. Additional information. [OPTIONAL]


IC 13. Manager selection activities

13.1. Indicate what activities you undertake during the process of selecting a manager.

Research and screening


ESG people/oversight

Process/portfolio construction

Selection process and reviewing documentation

13.2. Indicate whether you use any of the following scores or targets in your manager selection process.

13.3. Additional information. [OPTIONAL]

IC 14. Incorporating asset owners’ investment principles in selection of manager

14.1. Describe how you incorporate asset owners' investment principles into the manager selection process.

          We assist clients by recommending managers we believe are appropriate to their mandate and mission.  We also help clients create investment policy statements that incorporate their mission and philosophy and help develop socially responsible guidelines.  We have extensive experience working with clients to build portfolios and/or select managers that meet their specific requirements from a sustainable/ESG perspective.  We have performed a variety of exposure analyses for clients to help them understand their exposure to specific industries (fossil fuels, alcohol, tobacco, gambling, GMO, weapons, etc.).   We also provide research to address performance and fiduciary concerns, assess third-party ratings providers, help set priorities for implementation based on client goals and the robustness of the asset class universe, and create monitoring tools to allow clients to track and report their progress on mission-related goals.  In many cases clients who are not necessarily investing with ESG considerations have selected ESG-focused managers we recommend because they are best-in-class.

14.2. Additional information. [OPTIONAL]

IC 15. ESG in selection due diligence

15.1. Briefly describe how you include ESG factors in your due diligence process for manager selection.

          We have a list of questions our research analysts ask both our traditional and ESG recommended managers. The responses to these questions and resulting dialogue are considered within the context of our recommendations and ongoing monitoring of investment managers. On a quarterly basis we review performance and portfolio holdings and characteristics and engage with managers to ensure that all remain consistent with our understanding of these managers. Questions include how ESG considerations influence the firm and its investment strategies, how ESG is integrated into research and portfolio construction, whether and how the firms engage with portfolio companies and other influencers, the degree to which climate change is considered a material risk for portfolio holdings, whether the firm is a signatory to UN PRI or is active in any other industry groups on ESG issues.

15.2. Additional information. [OPTIONAL]

IC 16. Monitoring investment managers on ESG

16.1. Indicate whether you set any of the following to measure compliance/progress, or use the following information to review and evaluate the investment manager.

Setting measures for the investment manager as part of the monitoring process

Reviewing and evaluating information from the investment manager as part of the monitoring process

16.2. Describe how you raise and manage concerns when monitoring investment managers on ESG factors.

          Our ongoing process for monitoring recommended managers involves conducting a quarterly review, which includes examining, as appropriate, the manager’s adherence to investment policy, objectives, guidelines, and risk controls.  Analysts typically review risk and return statistics, portfolio characteristics, available performance attribution reports, quarterly letters, and have ongoing dialogue with the investment managers.  Discussions with investment team members focus on significant changes to portfolio positioning, strategy performance, as well as changes to the portfolio team, investment process, and firm structure. Accelerated reviews of recommended managers may be triggered by the portfolio failing to adhere to its stated investment philosophy or falling outside of risk parameters.  Other events causing accelerated reviews may include significant turnover in key investment professionals, change in firm ownership, excessive asset growth or investor redemptions, change in strategy and/or governance, draw-downs inconsistent with strategy, amended management terms, shift in risk controls, and operational/back office changes.  As a concern emerges, we seek to engage investment managers in active discussions to provide our perspective and to suggest recommendations for resolving the issues.  If there is no satisfactory resolution within a reasonable timeframe, the manager may be downgraded.  Such concerns are generally communicated to clients either by email, or call when timeliness matters in requiring action, or during the normal reporting cycle.

16.3. Additional information. [OPTIONAL]

IC 17. Reporting back to asset owners

17.1. Indicate whether you report back to asset owners on your manager selection and/or monitoring activities.

17.2. If yes, describe how you report back and the frequency.

          We work with each client to satisfy to their specific communication needs, all clients receive monitoring information, including performance and manager highlights, in their Monthly Executive Summary and Detailed Quarterly Report (QR).  The QR is a comprehensive resource for analyzing the portfolio at the total fund, segment, and manager levels.  We also communicate important news on specific managers via “echo” emails on an as needed basis.

17.4. Additional information. [OPTIONAL]

IC 18. Demonstrating value on manager selection, appointment and monitoring

18.1. Describe how you measure, track or otherwise demonstrate your value on manager selection and monitoring services.

          As noted in our response to IC-09, we measure our performance both qualitatively and quantitatively over a longer period.  Quantitative evaluation criteria may comprise risk-adjusted performance comparisons, including value added from our investment manager selection and performance.  We do not consider adherence to an ESG directive a hindrance to our own performance.  Qualitative evaluation criteria include effective reporting and communications, along with the overall effectiveness of the Firm’s “external staff function,” including successful implementation of ESG standards/goals.

18.2. Additional information. [OPTIONAL]

IC 19. ESG in manager selection, appointment and monitoring (Not Completed)