Insti7 aims for haute couture fund selection advice
Benoît Boru, founding partner of French investment advisory company Insti7, speaks about growth since the financial crisis and long-term fund selection for cautious clients.
Insti7’s functional name was inspired by the seven activities it chose to concentrate on: asset and liability management, portfolio auditing, education and training, fund
selection, risk control, financial engineering and integrated solutions.
Benoît Boru, one of its three founding partners, is careful to underline the difference between his company and the role of other fund selectors, such as private banks.
Insti7 does not actively manage clients’ money, rather it advises clients on which funds to invest in – there is no obligation to take Insti7’s advice. For Boru, the most important aspect of the company’s fund selection activity is acknowledging that different funds fit with different clients – in sartorial terms, that his clients need “haute couture” fund selection advice.
The fund selection process differs according to whether a manager is being chosen for a segregated account or a pooled fund. Segregated accounts are more long-term investments (clients tend to stick with managers in this scenario for three to four years) and carry more constraints. For example, some clients will only invest in French funds, or have strict criteria regarding minimum assets under
For segregated accounts, Boru therefore focuses on funds which have stable teams, strong risk controls and where it seems certain the management company will still exist in three years. He sends them detailed questionnaires and most importantly determines whether they are willing to build a portfolio that meets the needs of a specific client.
“The fund’s process has to meet client constraints,” Boru explains, for example, a client might want to access the credit market without using credit default swaps (CDS).
This is difficult, as CDS can create a lot of value and many credit managers depend on it. Yet, if a credit manager can cut CDS out of his trades, Boru questions how they will make added value.