Managing fund selection for domestic and global clients

Even global financial brands need to be based somewhere, to have a ‘home’ identity, says Société Générale’s James Ellis.

Fund Solutions, the fund selection unit for Société Générale Private Banking is based in Guernsey and Paris, with additional staff Singapore.

Managing director James Ellis said the unit’s function is to filter the universe of tens of thousands of funds for SGPB clients, finally putting forward a selection representing more than 100 investments.

The essence of the process is the verified independence of the unit, which is free to select products from any fund provider anywhere in the world, according to the client’s needs.

Ellis says the process itself is free of geography, and can function equally well anywhere in the world.

SGPB itself addresses different markets its domestic base in France, as well as a diversified, demanding international client set, which typically is highly mobile.

Ellis notes that the style and preferences of French domestic investors are slightly different from global clients notably, they are offered more proprietary products, but otherwise the fund selection process remains the same.

Open Architecture

Along with recent corporate restructuring, Société Générale Private Banking has committed the whole business line to open architecture, where clients are offered a choice of best-of-breed products which may or may not include those offered by the bank itself, an associate or a subsidiary.

A key component of an effective selection process is a reservoir of accurate data, provided for Ellis from sources such as Morningstar and Bloomberg.

Ellis estimates there is a ‘useable’ universe of 66,000 funds globally, coverage of which is divided among four teams responsible for Europe, the US, and Asia, plus an absolute return team.

These analysts extract the funds relevant to their sector and run them through quantitative screens to identify the best and most consistent performers.

The proprietary process uses over 30 different perspectives on risk and return. After filtering there are probably only about 20 funds that are eligible for further consideration.

Fund selections

Ellis says his analysts examine a fund’s risk adjusted performance in rising and falling markets, and poses questions at both the fund and group level, “which creates an intelligent debate with the fund provider”.

The culmination of the process is a list of four or five funds in each investment sector which will have different characteristics in terms of investment style or process.

That group is then monitored continuously before and after the funds are admitted to the SGPB buylist. SGPB’s €12.3bn in mutual funds gives it the clout to ensure best terms for its clients.

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