Portfolio Solutions

We manage two types of global multi-asset solutions which combine the four pillars of our investment process under the managed account structure. The Drummond Dynamic Portfolio is a goals based solution which has a flexible asset allocation. The Strategic Series are traditional risk based portfolios provided in four clearly defined mandates to cater to different client risk profiles.

Investment ProcessDrummond Dynamic PortfolioDrummond Strategic SeriesManaged Accounts

375

data inputs

3.6 million

data points

68

macroeconomic variables forecasted

15

asset class returns forecasted

10,000

portfolio simulations

200+

fund manager meetings a year

100+

years of experience and insight

365

days a year observing

Investment Process

Our investment process is separated into four elements: strategic asset allocation, tactical asset allocation, investment manager research and portfolio construction. Each of these processes is proprietary and developed using our combined 70 years of asset management experience in order to provide robust, diversified portfolios for our clients.

Most multi-asset portfolios are anchored to a static strategic asset allocation that relies on long-term forecasts and assumes a steady relationship between those assets over time. While our strategic asset allocation process provides us with a solid foundation from which to manage our portfolios, we understand that average returns do not always reflect an investors true experience given extended periods of market performance below and above longer-term expectations. As experienced asset managers, we manage this through active portfolio management.

In the following section we provide a brief overview of each step within our investment process.

Step 01

Strategic Asset Allocation

The assets you invest in drive the majority of portfolio returns over the long term. Our strategic asset allocation process is proprietary, leveraging sophisticated modelling tools to generate forward looking expected risk and returns. The design of our SAAs is an iterative, multi-stage process. It is anchored around three key processes: (1) capital market assumptions, (2) portfolio optimisation, and (3) portfolio simulation.

Our capital market assumptions are developed using a macroeconomic return framework. This means that our expected returns are internally consistent and are the best reflection of our view of the world whilst also allowing for scenario analysis. To undertake portfolio optimisation and to estimate portfolio risk we use our proprietary stochastic model (using Monte Carlo simulation) to project forward asset class and portfolio returns, develop scenario-based covariance matrices and to stress test the portfolios. Alongside this process is a robust governance structure, where all inputs and outcomes are reviewed by our external Investment Committee.

Step 02

Tactical Asset Allocation

Over shorter time horizons, opportunity exists to improve investor returns through active management. We seek to avoid large drawdowns and participate in the appreciation of growth assets over the medium term, delivering better risk adjusted portfolio outcomes over time.​ Our tactical process incorporates multiple observable, fact-based inputs to drive the decision-making process. This enables us to act for clients when the market opportunities present themselves.

Our TAA process is guided by our proprietary tactical asset allocation monitor, which is our best expression of the things we think matter for relative asset class returns. The monitor combines a systematic positioning framework based on factors which in the past have improved investment outcomes, and our investment outlook which represents a translation of our expected macroeconomic outlook into asset class returns and policy stance. This tool helps us manage a robust and repeatable active asset allocation process which is evidence based, and frees up time to focus on what matters most – a deep consideration of our conviction in the model’s output and the likely evolution of the economy and markets.

Step 03

Manager Research

We believe that manager selection is a key area of alpha generation. When we allocate capital to a manager, we take a total portfolio approach, considering the broader investment environment, the manager’s ability to outperform their respective benchmark and other available investment opportunities within each asset class.  With the team’s experience encompassing both manager research and funds management, being able to really understand the businesses, the people and their processes enables us to have a deeper insight into the suitability of each manager in the portfolio.

Through our research process, we undertake rigorous proprietary due diligence, including regular one on one meetings with the portfolio manager and investment team. We conduct over 200 meetings per annum both domestically and offshore, writing our own research and rating each manager within a uniform framework. Our research focuses on investigating a set of core criteria which we believe to be imperative to portfolio management success with ongoing manager reviews conducted regularly to ensure they have adhered to their processes.

Step 04

Portfolio Construction

Portfolio construction brings the three research pillars of our process together. Our quantitative tools construct the optimal asset mix based on the specific risk and return objectives of each portfolio and helps determine the preferred manager mix within each asset class.

Our qualitative insight overlays this output with the experience of the investment team and regular input from the Investment Committee to consider the underlying market conditions and what that means for each asset class over the medium term.

The combination of the above drives the active tilts at the asset class level within the portfolio. We also continually monitor each underlying manager's ability to outperform given those market conditions. The team are supported by a robust third-party risk system providing insights into the factors contributing to the risks of each portfolio.

Dynamic

DDP

Drummond Dynamic Portfolio

The portfolio has a dual objective of generating CPI +4% p.a. over the cycle whilst maintaining a strong focus on downside risk management. To achieve this dual objective, the portfolio has a flexible asset allocation strategy. This enables us to take advantage of opportunities as they arise, participating in the long-term growth of equities when times are good and conversely protecting capital by moving to defensive assets during negative periods.

The strategy may be suitable for investors who have accumulated wealth and want to protect it against inflation whilst earning a healthy yield well in excess of cash.

Performance as at June 2021
Current Report
Past Reports

Source: Drummond Capital Partners, BT Panorama, Refinitiv;
Past performance is not indicative of future performance Numbers greater than 1 year are annualised. Peers represent a composite of Institutional real return funds. Inception date is 31/3/2018.. The returns shown are net of fund manager fees but gross of model management fees. They are calculated from the DDP model portfolio within BT Panorama and as such may vary over time and vary by individual client.

Strategic

Drummond Strategic Series

These portfolios are designed for investors and their advisers who, having determined their investment objectives, are seeking a professionally managed and highly diversified global multi-asset solution.

The Strategic Series combines the four pillars of Drummond’s investment process in four clearly defined portfolio mandates:

30%

Drummond Strategic 30

This portfolio has a neutral exposure to growth assets of 30% and is suitable for investors with a moderate tolerance to risk and a focus on regular income. The majority of assets are defensive such as government bonds, corporate debt and high interest cash products.

Performance as at June 2021

Source: Drummond Capital Partners, BT Panorama, Refinitiv.
Past performance is not indicative of future performance. Returns greater than one year are annualised. Peers represent a composite of Institutional multi-asset moderate funds. Inception date is 1/10/2019. The returns shown are net of fund manager fees but gross of model management fees. They are calculated from the model portfolio within BT Panorama and as such may vary over time and vary by individual client.

50%

Drummond Strategic 50

This portfolio has a neutral exposure to growth assets of 50%. It is suitable for investors with a balanced tolerance to risk, seeking less volatile returns and regular income. The portfolio is highly diversified across equities, property, government bonds, corporate debt and alternatives.

Performance as at June 2021

Source: Drummond Capital Partners, BT Panorama, Refinitiv.
Past performance is not indicative of future performance. Returns greater than one year are annualised. Peers represent a composite of Institutional multi-asset balanced funds. Inception date is 1/10/2019. The returns shown are net of fund manager fees but gross of model management fees. They are calculated from the model portfolio within BT Panorama and as such may vary over time and vary by individual client.

70%

Drummond Strategic 70

This portfolio has a neutral exposure to growth assets of 70%. It is suitable for investors willing to tolerate greater levels of volatility in order to achieve higher growth over the long term. The portfolio combines a large exposure to Australian and international equities with other growth asset classes such as real estate and alternatives.

Performance as at June 2021

Source: Drummond Capital Partners, BT Panorama, Refinitiv.
Past performance is not indicative of future performance. Returns greater than one year are annualised. Peers represent a composite of Institutional multi-asset growth funds. Inception date is 1/10/2019. The returns shown are net of fund manager fees but gross of model management fees. They are calculated from the model portfolio within BT Panorama and as such may vary over time and vary by individual client.

90%

Drummond Strategic 90

This portfolio has a neutral exposure to growth assets of 90%. With a fully invested growth allocation it is only suitable for those investors willing to accept significant volatility. The portfolio combines a significantly large exposure to Australian and international equities with other growth asset classes such as real estate and alternatives.

Performance as at June 2021

Source: Drummond Capital Partners, BT Panorama, Refinitiv.
Past performance is not indicative of future performance. Returns greater than one year are annualised. Peers represent a composite of Institutional multi-asset high growth funds. Inception date is 1/10/2019. The returns shown are net of fund manager fees but gross of model management fees. They are calculated from the model portfolio within BT Panorama and as such may vary over time and vary by individual client.

Managed Accounts

Drummond focuses 100% on managed accounts for the delivery of its investment solutions. Each element of our process is refined for implementation within a managed account framework resulting in a considered and consistent outcome for all our clients. Managed accounts enable us to deliver an institutional quality investment process that would normally be confined to pooled funds under a personalised structure whereby our clients retain control, transparency and tax efficiency.

The financial advice industry is undergoing significant structural changes and as standards rise, so to does the need for specialisation. Advisors and their clients are now recognising the need to partner with specialist asset managers such as Drummond. Doing so increases their focus on the increasingly complex advice requirements of superannuation and retirement planning as well as the ever changing regulatory environment. A recent Investment Trends survey of advisors who had adopted a managed account solution found that on average they spend 12 hours less per week on investment administration such as preparing RoAs and following up signatures. These 12 hours are then available for client related activity and business growth.

In addition to the efficiency benefits of managed accounts, there are numerous benefits of the Drummond Capital Partners service:

01

A dedicated investment team delivering a robust and repeatable investment process

02

Disciplined and equitable execution of ideas with real time updates

03

Strong risk management and more consistent portfolio outcomes over time

04

Well established client reporting and market insights content enhancing client engagement

05

Access to our wholesale pricing arrangements reducing total portfolio costs

Drummond’s portfolios and investment service can be delivered as a turn-key solution using our brand or under a white labelled arrangement. There are two main types of managed accounts which our clients can access:

MDA

Managed Discretionary Accounts (MDA)

SMA

Separately Managed Accounts (SMA)

MDAs are delivered via an Investment Program as part of a Statement of Advice. They require an MDA Operator which may be the AFSL Dealer Group or a specialist MDA Operator.  

SMAs are delivered via a Product Disclosure Statement (PDS) issued by the Responsible Entity (RE) of an investment platform.