Cyrill Moser
Glossary
ZWEI wealth's proprietary approach (the ZWEI method) allows us to conduct independent and comprehensive assessments of any investment strategy. To this end, ZWEI Wealth carries out extensive analyses of asset managers and the results they achieve. The data we use are provided either directly by asset managers or by their clients.
The ZWEI method consists of the four components «provider», «track record», «costs» and «fit». Based on these components, we examine how well a portfolio is suited to achieve our clients' investment objectives. The four components are explained in more detail below. We use the ZWEI method to find the most suitable investment strategies for each investor.
Provider
The Provider component examines the extent to which an provider fulfills the basic requirements for asset management. This component is based on different factors and only changes slowly over time.
How long an asset management company has been in existence, how much money has been entrusted to it, and how many employees are involved says a lot about the robustness and stability of a company. We also attach great importance to the degree of specialization, and we assess the ownership structure. In addition, we pay attention to whether the required licenses exist.
For asset managers who already manage active portfolios on the ZWEI platform, the average performance figures as well as expert and client assessments are also taken into account.
Track Record
The Track Record component measures how well the performance of the proposed investment strategy compares to a passive benchmark and comparable offerings from actively managed strategies in the market (median). For this purpose, we calculate three measures:
- Comparison against benchmark: The performance and volatility are measured against the passive benchmark we have chosen.
- Comparison against median: The performance and volatility are measured against comparable actively managed strategies.
- Consistency: It examines how systematically an investment strategy performs better than the median.
Cost
The true total cost of an investment solution is often difficult to assess and non-transparent. Complex cost structures and inadequate disclosures make it difficult to compare costs. We analyze all cost levels of an investment solution, regardless of whether these costs are incurred by the asset manager directly or by a third-party provider. Total costs are measured against the benchmark and median. They generally include:
- Custody fees
- Transaction fees
- Management or advisory fees, including performance-related fees
- Product costs
- Other costs
Fit
The «fit» or «solution fit» measures how well an offer fits the needs of a particular investor. On the one hand, this includes an initial assessment by our experts of how well an offer meets the specifications of a tender and customer needs. On the other hand, our discussions of results with investors may lead to them developing additional personal preferences.
Besides clearly identifiable qualitative and quantitative requirements (e.g. size or specialization), soft factors and thus subjective views of investors can also be taken into account (e.g. regional preferences or exclusion of certain styles or provider types).
Rating Scale
| 1.00 - 2.69 | Not recommendable |
| 2.70- 2.99 | Satisfactory |
| 3.00 - 3.29 | Recommendable |
| 3.30 - 3.59 | Good |
| 3.60 - 5.00 | Very good |
Risk Profiles
The following risk profiles (also known as standard strategies) are commonly used in Switzerland. These standard strategies allow a comparison of returns, risks, and costs within the respective risk profile. The classification of these risk profiles is based on the equity component (excluding alternative investments) of a portfolio.
| Risk Profile | Portfolio Equity Content |
| Fixed Income | 0% |
| Income | ca. 10% |
| Yield | ca. 25% |
| Balanced | ca. 45% |
| Growth | ca. 65% |
| Equity | ca. 90% |
Comparables
Two comparables are used to assess the performance of financial service providers: passive benchmarks and comparable offers from the market (median). ZWEI Wealth uses different comparables depending on the objective:
| Benchmark |
A passive portfolio that consists of passive investments, such as exchange-traded funds (ETFs) or index funds, which is replicated with the corresponding cost structure. Using the easiest alternative as a benchmark allows for simple and transparent comparison of investment results. |
| Median | The median of all comparable offers from the market that match the risk profile of the portfolio. |
Other Terms
ZWEI Wealth also uses other established terms and methods in its analyses, which include the following:
| Return | In the asset management industry, the return of a portfolio is preferably time-weighted (TWR), or alternatively money-weighted (MWR). ZWEI Wealth generally prefers the time-weighted return. As is customary in the industry - and requested by ZWEI Wealth - the gross return is used for all comparisons, which includes transaction costs. |
| Strategic Asset Allocation | The strategic asset allocation (SAA) divides all assets into the various sub-asset classes (for example, cash, bonds, equities, real estate, alternative investments). The SAA can be constructed based on the ability and willingness to bear risk, the economic environment, the weighting of the individual markets in the global market, mathematical models, and individual needs and restrictions. |
| Custody Fees | The cost of holding and managing investments in the custody account. Besides the cost of accounting, this also includes regular reporting on changes in value and returns, as well as tax reporting. There are custody offerings that include transaction fees on top of the usual custody fees in a so-called all-in custody fee. |
| Transaction Fees | The fees and charges arising from trading in securities in the custody account. These include brokerage fees, stock exchange trading fees, margins (bid-ask spread) on securities, margins on foreign currency trades, and non-refundable taxes such as stamp duties. Withholding taxes, for example, are not regarded as transaction costs because they can be recovered through a tax filing. Some of the transaction cost components may be very difficult to measure, or they may e not measurable at all. |
| Management Fees | All management and advisory fees charged by an asset manager. This also includes the impact of performance-based remuneration models. |
| Product Costs | All explicit and implicit charges and fees incurred within investment instruments such as investment funds (including exchange-traded funds) or structured products. Product costs are charged directly to the investment instrument and may include additional custody fees, transaction fees, management fees and other costs charged to investors. Product costs also include all costs that arise in nested product structures (funds that contain other funds). The performance of an investment instrument is reduced accordingly by such ongoing product costs. |
| Other Costs | Other fees include all costs that are not covered by any of the preceding cost components. These include, but are not limited to, interest charges, including negative interest, on loans and overdrafts and credit balances, margins on interest, shipping charges, or costs for customized reporting. |
| All-in Fee | The all-in fee is a model in which fees and charges are combined and charged in a lump sum, which may seem to be easy to understand. The all-in fee is typically offered as a percentage of assets or as a lump sum. It should be noted that even an all-in fee often does not include all costs, is not standardized, and consequently should be interpreted with great caution. |
