MORNBFI Vol. 1 - Planters Development Bank

APP. Q-4811.12.31concerned groups/entities; andv. Clear delineation of duties andresponsibilities of each of the departments,subsidiaries and affiliates of the TE, wheresuch groups or entities share theaccreditation credit process.(3) Investment processThis process defines the investmentpolicies and procedures, includingdecision-making processes, undertaken bythe TE in the execution of its fund/assetmanagement function. The primaryobjective of such process is to create astructure that will assure TEs observeprudence in investment activities at all levels,preservation of capital, diversification, areasonable level of risk as well asundivided loyalty to each client andadherence to established structure for theTE’s investment undertakings. Theinvestment process covers a broad rangeof activities; thus, the investment policiesshall clearly outline the parameters that, ata minimum, include the following:a. Overall investment philosophy,standards and practices. A general statementof principles that guides the portfoliomanager in the management of investmentsoutlined in the board-approved policy, alongwith a discussion on the practices andstandards to be implemented to achieve thedesired result.b. Investment Policies and Processes.Defines the policies and the processesundertaken to create the portfolio to ensurethe proper understanding of the client’spreferences.i. Profiling of client. Aims tounderstand the level of maturity of theclient relevant to the creation of anappropriate portfolio.ii. Portfolio construction for custommadeportfolios. Includes the process ofresearching and selecting recommendedportfolio and setting objectives or strategiesfor diversification by types and classes ofsecurities into general and specializedportfolios.• Asset allocation. Outlines theprocess and criteria for selecting andevaluating different asset classes identifiedto be appropriate for the client’s profile andinvestment objective. It includes theallocation of desired tenors in conjunctionwith the client or portfolio profile basedon the CSA or IPS. The asset allocationmay be based on percentage to totalfunds managed by the TE or stated inabsolute amount whichever is preferredby the client.• Security selection. Policies andprocedures on the selection of investmentoutlets, including investment advisory, mustbe in place. This involves the selection ofissuers for each of the identified assetclasses. The process provides for thereview of investment performance usingrisk parameters and comparison toappropriate benchmarks. It shall alsoidentify the documentation required for allinvestment decisions.If the TE uses approved lists ofinvestments, there shall be an outline ofthe criteria for the selection and monitoringof such investments, as well as a descriptionof the overall process for addition to anddeletion from the lists.• Benchmark selection/creation.Selects or crafts the benchmarks to reflectthe desired return of the portfolio and tomeasure the performance of the portfoliomanager. The TE shall be required tomeasure performance based on benchmarksto gauge or measure the performance of theaccount. The TE must have clear definitionof its benchmarking policy.• Limits. Identifies any limitations onportfolio management which the client mayimpose on the TE. These limitations haveto be specific as to the nature of the portfolio,such as but not limited to, core holdings,investment in competitor companies, andcompanies engaged in vices.• Risk disclosure statement. A clearand appropriately worded statement/s todisclose different risks to clients of theApp. Q-48 - Page 8Manual of Regulations for Non-Bank Financial Institutions