Investment Advisory Service
The feature of our investment advisory service is to share the knowledge and understanding with regard to investment starting from risk-return relation and to pursue profit through Quantitative approach. In addition, we aim at offering the investment advisory service through interactive communication with the client differently from the one-way information providing service which are often done by many investment advisory companies.
We offer advisory and management service towards retail and corporate clients in order to do risk-return balanced investment depending on each situation and request from the clients.
Based on the risk management methodology which are practically used by global major head funds and trading division of large foreign investment banks, the feature of our service is to aim at optimization of return by curtailing the risk taken for value-at-risk below the planned level. Furthermore, we constantly verify my making use of risk factor mode whether the client is only taking intended risk and make an advice on methodology to seek for return by taking out unintended risk.
To be more specific , we offer investment advisory service to materialize appropriate investment by quantifying (visualizing) risk on continuous basis through usage of IT technology and making easy-to-follow explanation on risks taken by the clients.
Even though we are small boutique house, our staffs have the following backgrounds and skills with which we can offer this service.
Our management used to be in charge of trading management at foreign investment bank and is quite familiar with state of art financial products including derivative products and those risks, which enables us to offer investment advisory service which can widely cover OTC products, not limited to listed product.
Our management have more than 30 year experience in financial industry (most of them were engaged in trading business) and have established close relationship with major institutional investors and many head funds. Through such network, we are in the position to acquire up-to-date information in the financial industry. As the result of that, we can offer the most appropriate investment product to the clients.
As we are boutique house and do not belong to any financial groups. Such our independent status enables us to offer the most appropriate service to the clients in a prompt manner. Moreover, we can deal with any situational change promptly and flexibly.
We think that our investment advisory service is quite useful for the clients with the following objectives.
- 1 To acquire exquisite knowledge on investment.
- 2 To seek for return by managing the risk in proper manner
- 3 To improve the bad investment performance
And then we Aristagora Advisors would like to grow together with the clients with such needs.
Collective Investment Sheme (fund)
- Aristagora Advisors is engaged in the fund management business outline below. However, in basic we think it important to offer investment advisory service to corporate clients and retail clients who are regarded as “amateur investor” by definition. Therefore, we recommend our clients to do investment on their own as much as possible and we Aristagora Advisors support clients as the investment advisor.
- However, if the clients can not conduct their investment on their own due to various reasons, we also support such clients on fund management itself. For such occasion, it is quite important to share and have better understanding on investment knowledge including the content of investment scheme (fund) and risk-return relation. We are considering the following two schemes.
- First of all, in case that the clients do not have enough time to conduct investment or can not manage the investment risk properly, we Aristagora Advisors grasp the investment strategy of each client and introduce collective investment scheme (fund) and offer investment advisory service. As the result, we assume that Aristagora does investment management on behalf of the clients.
- Secondly, we assume that collective investment schemes (funds), which are normally not introduced to the clients, are offered the clients. In this scenario, we can offer accessibility to various funds through the methodology of collective investment scheme as a part of investment strategy for the clients.
Please note that we Aristagora Advisors are absolutely offering investment advisory service with regard to fund management business by using collective investment scheme (fund).
- The feature of our investment advisory service is to share the knowledge and understanding on investment starting from risk-return relationship with the clients and pursue profit through quantitative approach.
- We Aristagora Advisors have in-depth discussion with each investor reviewing investment amount, investment capacity, investment purpose, investment vision, investment experience, knowledge on financial products, investors’ background (including current investment environment and agenda and plan in the future) and provide profound explanation on our service to the clients. After we have mutual understanding with the clients, we select the investment strategy (risk tolerance and return target) which we believe the most appropriate for the clients and start the investment advisory service. Needless to say, we constantly review the investment strategy depending on clients’ situation.
- In case of global multi-asset fund with investment into global markets and products, it is very much situation in which around 70 % of investment result depends on asset allocation strategy. Therefore, in our investment advisory service for corporate clients, with the assumption that we have investment direction which we select on the above mentioned process, we will provide our advice on portfolio allocation and creation by introducing various financial products including ones which have not been introduced in Japan. Obviously, we will provide an appropriate explanation on risks of each financial products. And more importantly, we do our utmost to let the clients to understand such risk profile.
- As outlined above, the basic feature of our service is to conduct quantitative approach is numerical conversion of risk (VaR: Value at Risk, Stress test), then subsequently to grasp risk-return relationship such as level of sharp ratio and beta and to aim at providing investment advisory service with which the clients can enjoy higher return in comparison to the risk.
- In addition, we can also offer investment advisory service to cope with trading which only deals listed stocks. In this case, we make use of risk model concept and plain model , show the difference between taken risk and market behavior, and the performance as the result of that in the easy-to-follow numerical number (never in abstract expression). With this methodology, we will provide investment advisory service in order to acquire expected return matching with the taken risks.
- Our basic stance on the fee schedule is based on NAV (net asset value). We will charge across the board ratio on NAV and no additional fee is charged. We believe that this fee schedule is the most rightful way. It may lead to be “conflict of interest” to charge fee on transaction basis (like “rap account” promoted by some securities houses). Regardless of the fact that the client may win or lose, the fee will be paid to investment advisory companies on transaction basis.)
- The client universe which we Aristagora Advisers seek is not investment and financial professionals but corporate and medium- and small-size companies with relatively large size financial assets. We would like to provide financial know-how, which major institutional investors and global foreign banks provide to large entity, to such clients.
- The feature of our investment advisory service is to share the knowledge and understanding on investment starting from risk-return relationship with the clients and pursue profit through quantitative approach. In addition, we aim at offering the interactive communication with the clients unlike other investment advisory company with one-way dispatch of information style.
- At the first step, we put the emphasis to let the clients understand the background why the retail investors make typical mistakes in their investment. Based on such review, we have the time with the investor to have comprehensive discussion reviewing the background of investment and understand the thoughts on both sides. After this stage, we move on to the process to confirm the investment strategy (risk tolerance and return target) and start our investment advisory service to the clients. Needless to say, we constantly review the investment strategy depending on clients’ situation.
- During the process of selecting investment strategy (risk tolerance and return target), we make an appropriate decision to choose the best asset allocation. In case of global multi-asset fund with investment into global markets and products, it is very much situation in which around 70 % of investment result depends on asset allocation strategy. Even though this is telling us how to make the most important investment decision, the most of retail investors tend to downplay the importance of this point.
- Furthermore, we offer investment advisory service to cope with trading of only listed stocks with which the most of retail investor are familiar. In this case, we offer investment advisory service in order to achieve an expected return matching with the taken risks showing the easy-to-follow numerical number (never in abstract expression).
Hereby, we look at the following examples as the typical mistakes of retail investors.
- Investors do not think that they have loss as long as they do not sell the shares and realize the loss. It is right in view of taxation, however, it is not true in view of investment and fund management. The investment should be absolutely measured by the market price at time. Even though they understand this point, the most retail investors are not looking at the reality and keep on holding shares with losses.
- The typical example is so-called “salt-cured stocks”. The salt-cured stocks simply mean that investors are holding assets which value is lower than the acquired price. In another word, it is as if we invest again the same amount of money based on the market value into the same stock. We have to find out in a calm manner whether the current holdings are the most attractive investment choice compared with other stocks.
- Other mistake which we can often see is that retail investors tend to take excessive risk. As the result of that, they tend to end up with the salt-cured stock and regret their own investment. This is simply because they do not understand the quantity of risk which they are taking.
- Furthermore, it is not always the case but retail investors tend to trade more than necessary. They have to bear the cost and expense as they have to pay commission and market spread for every trade.
- In addition, in many cases it can be pointed out that the retail investors use option trade wrongly.
- Our basic stance on the fee schedule is based on NAV (net asset value). We will charge across the board ratio on NAV. We believe that this fee schedule is the most rightful way. It may lead to be “conflict of interest” to charge fee on transaction basis (like “rap account” promoted by some securities houses). Regardless of the fact that the client may win or lose, the fee will be paid to investment advisory companies on transaction basis.)
- However, in case of retail investors NAV tends to be smaller compared with corporate clients. Therefore, we may also consider combine asking the client to pay fee for investment advisory service on time charge basis.
- Accordingly, our fee structure consist of the following two patterns; fixed charge of asking clients to pay certain percentage on NAV (this is basic concept on fee structure) and the time charge.