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Getting it right from day one

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Prescient has been a formidable force to reckon with since its launch in Cape Town in 1998. It has been a trend-setter in various fields locally, and is now looking to spread its wings into sub-Saharan Africa, Europe and Asia.

What started as an investment management business has evolved to include an administration business, a securities arm, a wealth manager, retail product offerings, a linked life company and retirement products.

One of the first things you notice when you walk into the Westlake offices of Prescient is how quiet it is. Quite unexpected in the investment industry, but there is definitely no flashy image here. Everything comes across as quiet, contained and self-assured.

Maintaining an entrepreneurial spirit is part of the group philosophy. Staff across the group are equity owners in the business. This changes the mind-set of how people operate and also aligns staff and shareholders’ interests, which works for the benefit of their clients.

Prescient Investment Management’s cornerstone has been identifying, nurturing and unlocking people’s potential. As Prescient expands into new markets and grows the business, they are very aware of maintaining the culture, work ethic and commitment to clients. To manage this growth Prescient has to ensure they are ahead of the curve in terms of infrastructure, systems and people.

The overriding strategy within the investment firm is to preserve wealth and enhance returns for its clients. This may sound obvious, but Prescient’s managers contrast this to other institutions that mostly concentrate on returns and often leave risk management off the table.

In practice, this means tailoring portfolios to the individual needs of the client; avoiding any bias in pricing; being totally transparent with regards to costs; sensible risk-taking; and adding appropriate value across the product offering.

The underlying approach is also to keep things simple. Says Guy Toms, Chief Investment Officer and Co-founder: “A client asked me if our processes have changed over the past few years, so I showed him the first presentation I did for them eight years ago; it’s still the same presentation, the same process”.

There is recognition at Prescient, however, that higher market volatility creates uncertainty with clients but volatility enhances Prescient’s ability to improve performance. Risk management is the key to achieving this.

“We try not to find the answer before we know what the problem is,” says Herman Steyn, Executive Chairman and Co-founder. “Make sure the problem or investment objective is clearly understood before you create a solution.”

He points to Prescient not being obsessed with the way that its competitors do things. “Rather, we rely solely on our own process and philosophy. Investors who become familiar with this naturally become our clients over time. It’s extremely important to us that they trust our process, benefit from predictable and stable returns and rely on our service.”

CEO of Prescient Investments, Eldria Fraser, places considerable emphasis on the company’s strong quantitative capability as a differentiator among rivals. “Unlike most managers, where portfolio managers generally have strong accounting skills, investment staff here have strong mathematical skills. We understand how assets react under different market conditions. Therefore we can, more often than not, focus on a more certain option. This ability increases the predictability and certainty of your returns. Sadly, many in the industry compete on gains only, rather than a combination of return at appropriate risk and capital preservation.”

Fraser goes on to say that Prescient would like to be the banker in a client’s overall portfolio. The part that you know you can depend on and that makes you sleep easy at night.

“Importantly, everyone should buy into the process and philosophy to make it work. If you want to maintain your culture, you have to pay attention to who you employ. People are bright, dedicated, can think out of the box and have a great work ethic. Portfolio managers speak with passion about what they do as they are all believers. Strengthened by our open plan office, young appointees grow up surrounded by what we believe.”

Also among Prescient’s attributes are its unique product offering and that it’s mandate-driven, says group Deputy Chairman Carey Millerd.

“When we enter into a contract with a client, our first priority is to deliver against that mandate. If we don’t feel that we can do that, we’d rather decline the opportunity. In fact, we have done so on several occasions, particularly when the client has investment targets that we don’t believe are attainable.”

He emphasises that when a client gives money to Prescient and enters into a particular fund, the client is assured that the risk benchmark of that fund will be met at the minimum and hopefully that the volatility of the market will always manifest itself on the upside performance.

Steyn follows: “When we say you are not going to lose money or that we’re going to give you market plus a bit, you know you’re going to get it. So clearly there is a remarkably high level of predictability by engaging in the Prescient experience.”

Having spent time interviewing the team at Prescient, one gets an over-riding sense of confidence.

It is confidence that doesn’t come from simply knowing you have employed bright minds to help mitigate risk. It is confidence that comes from each person knowing who they are, what they do and most importantly how to work as a team to execute a process that has proven itself time and time again. 
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