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Investment  >  Advisory Committee  >  What does the committee do?

What does the committee do?

The Advisory Committee meets quarterly and has a fixed agenda with several key areas to consider in relation to Managed Strategies:

• the key economic and market parameters used to derive the objective of each strategy
• the performance against stated objectives
• the continued appropriateness of the benchmark asset allocation; and
• the amount of acceptable risk budget - the additional 'risk' RLAM is permitted to take to derive additional return

The committee continually review the baseline parameters that have driven our modelling work and consequently the suggested benchmark asset allocation for each Managed Portfolio. These parameters have been taken to represent the committee's long-term view of inflation, interest rates and the relationship between returns from different asset classes amongst other things.  They would not be expected to change each quarter. Given their importance however, the committee consider their continued relevance each time it meets.

The second task is to review the performance of each of the nine Managed Strategies against their stated objectives and the performance of the three Scottish Life Managed funds against their respective benchmarks. A relative performance attribution analysis will be prepared each quarter to help customers understand how their investments are performing.

The third task involves the assessment of the continued appropriateness of the benchmark asset allocation split and, to some extent, requires to be undertaken in conjunction with the first two tasks. If the committee believes either the parameters need to be slightly altered or that performance is moving away from the objectives it will clearly consider alternative asset allocations to bring the strategies back on track.

The fourth task is to set an appropriate framework for RLAM to undertake active management within clear risk guidelines. A balance needs to be struck between a desire to allow a professional and experienced fund manager, such as RLAM, to take advantage of short-term tactical investment opportunities and the achievement of the fund objective. It is critical that allowing tactical positions to be taken cannot undermine the primary fund objective. To achieve this, the Advisory Committee sets a risk budget for each of the three Scottish Life Managed funds.