Investment Policy Development

Angeles Investment Advisors has written scores of investment policy statements for clients. We believe this is one of the most important documents for which fiduciaries are responsible, serving as a blueprint from which oversight duties are framed and providing a roadmap for the asset allocation and investment structure process.

We work closely with our clients to understand the financial objectives of their portfolios, their current financial condition, their risk preferences, their investment time horizons, their sources and uses of funds and any special circumstances that may exist. This process and the asset allocation policy that emerges from it is documented in an investment policy statement that defines investment objectives, guidelines and constraints for each institution. This document is a “living document” and should be reviewed annually, and updated as circumstances warrant.

Asset Allocation

Asset allocation is the primary driver of long-term portfolio performance. As such, we customize our approach to asset allocation for each client.

We begin by considering the suitability of various asset classes, both traditional and alternative, given each client’s specific needs and objectives. Annually, we publish our proprietary forward-looking return and risk forecasts for traditional and alternative asset classes, providing clients with a systematic framework for the asset allocation process. We then combine our proprietary, fundamental views of asset classes, capital market conditions, and investment opportunities to develop several diversified asset allocation choices that integrate multiple asset classes.

Using Monte Carlo simulation, we conduct in-depth analysis of the return and risk for each potential optimal portfolio, dynamically linking potential market outcomes with our clients’ financial obligations. From this analysis, we identify diversified portfolio policies that meet our clients’ needs, and recommend what we believe will be an optimal mix.

Portfolio Structure

Portfolio structure refers to the mix within asset classes of different types of management approaches and market exposures, e.g., value versus growth, active versus passive, and large versus small or mid cap exposure. We employ a disciplined approach that combines quantitative risk factor modeling and risk budgeting with judgment and experience.

We evaluate each asset class in turn, addressing the issues of active or passive management and appropriate sub-asset classes. Furthermore, we analyze the fundamental risk factor exposures (such as market capitalization, style bias, interest rate sensitivity, credit risk, etc.) of each manager within the asset class to ensure that portfolio risks are diversified and that managers are complementary. Then, for each manager, we establish specific guidelines that identify appropriate performance benchmarks (e.g., relative to an index and to peer managers) and specify any restrictions.

Manager Research & Selection

Manager research is a core competency of Angeles. Our goal is to identify the rare exceptional investment firms for our clients and to know these firms from top to bottom. We believe that manager selection is critical to the investment process given that the wide dispersion of performance results that we have observed between top managers and median (or worse) managers, especially in alternative asset classes, over time.

Given the large and ever evolving nature of the investment industry, Angeles Investment Advisors conducts hundreds of meetings each year, engaging with managers across a wide range of asset classes, from traditional equity and fixed income to alternatives such as hedge funds and private real estate. We maintain an extensive proprietary database on thousands of managers and the due diligence process we use to evaluate them. This resource is actively used and referenced in our manager evaluation and monitoring process.

Evaluating, Selecting & Monitoring Managers

The firm’s senior investment team is responsible for manager research, leading to an unusual level of depth in our understanding of managers and the investment approaches they apply. Angeles clients are assured that their primary consultant is directly familiar with the managers on their roster.

We will only recommend a manager when we are confident that we and our clients will know what to expect from the manager, an expectation that is based on our deep understanding of what the manager does and how the firm accomplishes its objectives. All manager decisions are approved by the Angeles Investment Advisors’ Investment Committee, which is comprised of all the firm’s investment professionals. This systematic review ensures that Angeles’ manager decisions are fully vetted in a collaborative, dynamic process.

We seek institutional-quality managers that have strong and stable investment teams, experienced management, solid and transparent business practices and financial interests aligned with clients. We also target consistent performance and style, conducting rigorous quantitative analysis to evaluate each investment manager's past performance, relative to peer groups and relevant benchmarks, and risk factor exposures. No manager is approved without thorough due diligence involving meetings with senior personnel, quantitative analysis, detailed proprietary questionnaires, on site meetings, and judgments taken from our process.

Absolute Return Strategies

We source and provide access to top-tier hedge funds for our clients across a wide range of direct hedge fund strategies, including long/short equity, market neutral, credit, event driven, distressed, macro and multi-strategy funds. Given each of our clients’ specific objectives, goals and constraints, we construct customized portfolios of hedge funds that complement the other aspects of each client’s portfolio.

Each manager is evaluated through our intensive and structured due diligence process. We are vigilant in our ongoing risk monitoring efforts, tracking factors such as leverage, portfolio concentration, gross and net exposures, sector and geographic exposures, credit and interest risks, and liquidity risks at both the manager and portfolio levels.

Private Markets

Our research team seeks out the most compelling investment ideas across private equity, and private real assets, which include private real estate, infrastructure, energy and timber.

In private equity, we identify top-quartile fund of fund managers that provide diversified portfolios across vintage years, geography, industries and sectors. Such firms have superior organizations and resources, stable and experienced teams, exceptional track records and strategic investment approaches.

Our clients are invested across a range of private real assets. Specifically, in private real estate, we evaluate strategies ranging from core to value-added to opportunistic strategies both domestically and internationally. Our team evaluates infrastructure opportunities globally, including brownfield and greenfield approaches. We evaluate energy partnerships across a spectrum of upstream (exploration & production), midstream and downstream (distribution and servicing) opportunities.

Fee & Terms Negotiation

We actively engage in fee negotiations on behalf of our clients across asset classes. Furthermore, where possible, we negotiate partnership agreements and side letters to further protect our clients’ interests.

Custody & Transition Management

Angeles Investment Advisors conducts custody reviews and searches for our clients.

We also assist in searches for transition managers as needed. Since moving large pools of assets can be a complex and costly task, we devise well-planned and well-executed strategies that maintain investment exposure, minimize expenses, reduce administrative burdens and maintain transparency throughout the process.

Capital Market Research

Capital market research is at the forefront of Angeles’ investment activities. As markets are constantly evolving, we believe it is critical to stay abreast of economic fundamentals, market sentiment, and the ever expanding universe of financial instruments. Our investment professionals conduct proprietary research, examining economic signals and evaluating conditions across markets. We engage leading industry experts on relevant topics to further inform our market views. Our Investment Committee meets regularly to discuss opportunities and risks facing our clients given both current and potential market environments. While Angeles does not attempt to time the market, we are opportunistic in our approach to portfolio construction. By proactively identifying investment opportunities, we are able to further diversify and enhance client portfolios.

Our ongoing research and judgments are formalized in white papers that are disseminated to clients.