Revisión de ARIA Capital Management

This article is online merely for informational purposes designed for the non-UK expat market, and is for entertainment and informational purposes only.

Nothing written here should be considered a promotion or solicitation to invest with Aria or anybody else, nor an endorsement of ARIA’s products and services.

Some of the information might be outdated, so you need to do your own research to verify any statements, including checking out Aria’s website.

ARIA Capital Management

ARIA Capital Management is a business name for the ‘Absolute Return Investment Advisers (ARIA) Ltd’, which grants access to the wealth management manifesto and services related to investment management. It has been authorized and regulated by the ‘FCA (Financial Conduct Authority)’. The firm has the main offices in Guildford in the UK and the international offices in Dubai, Malta and the Cayman Islands.

ARIA Capital Management offers its expertise in the services related to investment management to private individuals, individuals, corporate and institutional clients. 

The philosophy based on which they operate is “The best way to make money is not to lose it in the first place”, which shows that they strongly believe in capital preservation. Their primary principles are Impartiality, Independent Ownership and Progressivity. 

Their office located in Dubai holds the Financial Consultation & Financial Analysis’ license, which is regulated by the Securities and Commodities Authority and the de facto wealth management and financial services regulator in the UAE.

The European operations of ARIA Capital Management currently contain their asset and fund management platform, precisely the ARIA SICAV (Société d’investissement à Capital Variable), which is a publicly-traded open-end investment fund structure offered in Europe. This ARIA SICAV is authorized and regulated by the Maltese Financial Services Authority.

Their Cayman-based fund platform and manager, ARIA Capital Management (Cayman) Limited, is registered with the Cayman Investment Management Association. This is specially designed to meet the needs of professional or institutional clients who often require their own investment vehicle.

Investment Process

• Portfolio Construction – The funds in which the investments are made are designed in such a way that the portfolio built has a low connection to the traditional stocks and bonds while having the capability of delivering long-term returns.
  The asset allocation is done by analyzing the historical connections and similarities based on the risks of that particular investment along with the current market conditions.
  The aspects that are very essential and connected with each other while creating a perfect portfolio are Strategic Asset Allocation, Tactical Asset Allocation, Construction of Portfolio, Risk Management & Monitoring the Portfolio.

• Risk Management – The main priority of the fund is concentrated on managing the risk involved. In order to do so, the fund engages in a series of concentration, limits to guarantee enough diversification of risk across the existing funds and avoids more than the required amount of concentration in the asset class or strategy.
  The main factors in managing the risk are Expression of View by Instrument, Position Weighting, Setting Price Target, Setting Stop Loss Limits and Correlation of risk (both short-term and long-term).

• Portfolio Management – In order to ensure the success of a fund to meet with its objectives, allocation of the underlying assets and market exposures within the EFA AR Diversity Strategy Portfolio is continuously reviewed on a regular basis. Experts at ARIA Capital Management strongly believe in the dynamic and active asset allocation.
  The major factors involved in Portfolio Management are Analysis of Scenario, Correlation of Risk, Continuous Active Management, Active Hedging, Currency Overlay, Price Target, Stop Losses and Stress Testing.

Key features for EFA AR Diversity Strategy Portfolio

• Alternative Investment Strategies are designed in such a way that they are the fundamental components of any diversified investment portfolio either in case of an institutional investor or a private individual.
• Creating diversified portfolios for investors by investing in various types of assets including Forex, Property, Commodities, Absolute Return Funds, Private Equities and Volatility/Market Neutral Funds.
• Not following a replicated approach towards traditional asset classes.
• Multi-strategy and Multi-asset class equals in performance with the endowment funds of Harvard and Yale that are considered as leaders in diversified multi-asset class investing for more than 20 years.
• ARIA Capital Management gives access to institutional quality products. Many individuals aren’t able to actively invest in a way that the super endowments do, especially in the asset classes such as Private Equity. With the help of the EFA AR Diversity Strategy Portfolio offered by ARIA Capital Management, exposure to such asset classes is allowed.
• At ARIA Capital Management, continual sourcing and analysis of new asset classes, as well as fund opportunities, is implemented.
• Identification of suitable asset classes and accessing them in a cost-effective way is another advantageous thing that needs to be taken into consideration. Some examples include ETFs, Investment Trusts, Unit Trusts, or OEICs (Open-Ended Investment Companies) and Individual Securities.

Absolute Return Strategies

Let us have a look at the Absolute Return Strategies and how they acquire positive returns despite of the market conditions. 

• Commodities – Investments made in commodities issue exposure to tangible assets such as Oil, Metals, Agricultural Products that provide broader diversification of the portfolios.
• Global Macro Strategy – Investments made by implementing the Global Macro strategy look for profits, despite the direction in the market, changes in the currencies, prices of commodities and volatility of the market.
• Managed Futures – Investments made in Managed Futures tries to preserve the capital by attaining profits from the price changes and movements regardless of their direction in the financial markets as well as the commodities futures market.
• Real Estate – Investments are made in the Real Estate in order to attain capital appreciation by investing in companies that are involved in the Real Estate industry.
• Market Neutral Strategy – Investments made by making use of the Market Neutral Strategy seek positive returns disregarding the equity market conditions while maintaining a low similarity/correlation as well as reducing the risks in the equity markets.
• Global High Income – Yield Enhancement and covered call strategies are able to obtain high-income yields in order to provide an attractive overall return while providing protection from the disadvantages in addition to covering the advantageous returns.
• Government Bonds – During the times of market pressure, US Treasuries are considered as risk-free assets and they distinctively move forward as they are the most liquid asset class. However, there is a sovereign debt that should also be taken into consideration.
• GOLD –There might be significant potential disadvantages such as higher inflation, a drop in the price of the currency, rising risk premiums on the currency assets, etc. Despite all these factors, Gold remains a well-determined safeguarding asset. This can be considered as an Insurance policy for the portfolio of the client.

Asset Allocation

According to the data given on asset allocation by ARIA Capital Management in 2011, the asset allocation for a portfolio are as follows:

Global Macro Asset: AR Cautious Multi-Asset	27%
Alternative Income Strategies	17%
Absolute Return: Market Neutral	15%
Precious Metals: ETFs Gold & Gold Miners ETF	9%
Alternative Assets: Asset Backend Lending	7%
Private Equity	5%
Alternative Assets: Macro	5%
Japanese Equity	5%
Cash	5%
Relative Value Commodity	3%
Commodities & Inverse ETF	3%

Obviously, this was from 2011, so could have now changed.

The Term Sheet for Fund Specifics

• Investment Universe – Broad exposure along with diversification among the asset classes. Asset classes include both traditional and alternative assets, for example, fixed income, commodities, private equity, cash instruments, managed futures, equity, absolute return investments, etc.
• Objective – The primary target at ARIA Capital Management is to achieve a 7 – 8% growth in the capital while providing absolute returns on the client’s investments over a full market cycle, regardless of the market conditions.
• Major Characteristics – 
  • Investments are made based on the Absolute Return Investment Philosophy.
  • Multi-Strategy and Multi-Asset Class along with the alternate investment strategies.
  • A lower amount of similarity or correlation to the stock markets.
• Risk Target – Operate in a way such that the risk target has similar volatility to that of high-quality corporate bonds.
• AMC – 1.5%
• Benchmark – Base Rate of Bank of England + 2%
• Legal Structure – Recognized by the FSA and is a Non-UCITS (Undertakings for Collective Investment in Transferable Securities) Retail Fund.
• Domicile – UK
• Currency – Sterling
• Share Classes – Institutional and Retail Share Classes are made available with various minimum investment amounts as well as annual management fees.
• Performance Fee – 20% of the overall returns above the benchmark and subjected to watermark.
• Pricing – on a daily basis.
• ACD – Way Fund managers Limited.

Fees and Charges

Annual Management Fees at ARIA’s Discretionary Fund Management services are 1% annually. However, this is based on the type of service chosen, which means that the fees and charges can actually fluctuate.

Additional charges are levied on the clients, for example, fees charged by the financial advisers when asked for an independent review on their performance.

Fees levied upon the underlying funds within the portfolio (consisting of a portion of fees that are paid to ARIA by that respective fund), which are expected to be around 1.5%.

Every time an investment is purchased or sold, dealing charges are also applicable. These dealing charges are around 1% or £ 50 (whichever is lower).

The overall fees and charges applicable to the clients at ARIA Capital Management can be expected to be around 2.5% to 3.5% annually.

Pros and Cons

Advantages:

• Based in the UK
• Ability to understand and perform well in the international marketplace.

Disadvantages:

• Small business when compared to many other rivals in this field.
• History is chequered, meaning they have not been constantly efficient.
• The active methodology at ARIA Capital Management is questionable.

Further Reading: Investors Trust S&P 500 Review

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