The four main elements of CMB’s investment philosophy can be summarised as follows:
This investment philosophy originates in the culture and common characteristic of its traditional client base: wealthy people seeking safe investments.
Investments are therefore made with a view to protecting the invested capital, which means that caution and determination to reduce the risk of loss take priority over returns in portfolio construction, depending on the different asset categories and their specific levels of risk.
Also CMB wants each client to feel safe with his/her investments, which means that he/she must know exactly what investments are in the portfolio are, their potential for returns and their risk characteristics. A high level of transparency and detailed information ensure that clients are kept fully informed of their portfolio exposures and investment performances.
CMB knows that clients’ expectations change and that investment security is not necessarily the priority for all investors.
That is why CMB has always endeavoured to innovate so as to be also capable of offering clients products that give them exposure to different, decorrelated, possibly more volatile assets, with a greater potential for gain or which enable clients to take advantage of market opportunities for a part of their assets.
This approach is illustrated by products and services such as structured products, particularly credit linked notes, and certain funds, such as the Monaco Hedge Selection fund of hedge funds or the fixed-term bond fund.
Clients are formally informed about investment risk very early on, when the account opening documents are signed. For each type of product or service, CMB specifically informs the client of the related risks, setting recommended investment horizons based on specific risk profiles. In the case of mandates, for example, risk communication focuses on the maximum equities weighting set for each type of mandate.
CMB’s investment process involves two phases:
A monthly pre-Committee meeting where the investment team examines market analyses and asset managers’ expectations and draws up a investment strategy proposal.
A Financial Committee meeting where the investment products performance and services are reviewed. This second stage also involves an assessment of the contribution made by past strategic choices. Decisions are then made on future investment strategies and ideas by a vote on the proposals submitted by the pre-Committee meeting. CMB’s Financial Committee has two purposes: to define the group’s investment strategy and to identify investment opportunities outside the scope covered by the managed products.
The analysis and proposed strategies are made with a 3 months horizon. The monthly frequency of pre-Committee and Financial Committee meetings enables analyses to be adjusted for market trends.