Financial Advisory
LCG Advisory SCF S.p.A. is a leading financial advisor in the Italian institutional market for over 20 years, specializing in assisting Pension Funds, Provident Funds, Banking Foundations, and Health Funds through a personalized 360° approach. LCG’s assets under advisory exceed 30 billion Euros, and the consultancy provided is based on essential values such as independence, professionalism, and innovation, with the mission of achieving the best mix of performance maximization, risk containment, and management cost efficiency for the assisted Funds and their Investment Portfolios.
ASSET ALLOCATION
LCG, thanks to an in-depth understanding of the markets, a solid experience in regulatory and normative principles, and a team with over a decade of expertise, is capable of providing its clients with settings for Strategic Asset Allocation (SAA) consistent with their mission in terms of risk/return profile, regulatory requirements, and cost efficiency.
Prior to defining the medium to long-term Asset Allocation, LCG performs an Asset Liability Management (ALM) analysis to estimate the capitalization level (Funding Ratio) of the entity in the medium to long term, considering the specific pension characteristics of the client, demographic, macroeconomic, and financial indicators. To support the SAA process, LCG’s research team conducts daily macroeconomic and financial analysis of major international financial markets, presenting it in an independent weekly report.
Tactical Asset Allocation
LCG, thanks to continuous monitoring of market dynamics, provides its clients with support for tactical/dynamic portfolio adjustments (Tactical Asset Allocation, TAA). These adjustments are necessary due to periodic changes in risk/return profiles of different asset classes in the short term and to maintain the portfolio composition consistent with the risk and performance targets set during the Strategic Asset Allocation (SAA) phase.
TAA deviations from the SAA framework are made within predefined tolerance limits, both in terms of percentage weight and risk budgeting, established during the portfolio setup phase. To support Tactical Asset Allocation, LCG has scenario analysis and stress testing tools to simulate the effects of these deviations on the portfolio’s risk/return profile in the short to medium term.
SUPPORT IN THE EVALUATION AND SELECTION PROCESS
The company, during its years of experience as an advisor, has studied and collected over 1000 direct and indirect, traditional and alternative investment management strategies from leading international financial managers in its database. This allows LCG Advisory SCF S.p.A. to stay updated on the best investment strategies and those that best fit its clients’ Asset Allocation and needs. LCG Advisory SCF S.p.A. assists its clients in drafting the public tender for manager search, in evaluating offers, and in the subsequent onboarding of the selected manager/investment with the client. The evaluation phase is based on objective quantitative criteria and is conducted independently of third parties.
REAL ESTATE
In the Real Estate & Finance sector, LCG Advisory SCF S.p.A. is a specialized player in the management, enhancement, and sale of portfolios, including complex real estate operations, including non-performing assets. The company has developed extensive expertise in the relationship between institutional and international investors and originators in the Real Estate Corporate, Industrial, and Banking sectors. Over the years of the global crisis, it has structured itself to support NPL (Non-Performing Loan) management.
LCG Advisory SCF S.p.A.’s unique ability to assess Asset Allocation in Real Estate (the company has in-house professionals for determining the market value of portfolios and real estate vehicles such as SPVs, funds, REITs, etc.) and its sensitivity in evaluating the performance-risk correlation gained in sector-specific industrial consulting make it a knowledgeable and attentive partner in proposing solutions related to real estate-backed credit.
This expertise applied to the Real Estate sector allows LCG Advisory SCF S.p.A. to support investors and institutional entities in defining investment and risk management strategies in the following areas:
Existing assets, through the definition of the most appropriate management strategy (Strategic Asset Management), continuous monitoring of risk-return profiles for individual direct and indirect investments, and periodic updates of the exit strategy from the investment, also in relation to local market trends.
New investments, through the definition of the target Asset Allocation and related investment guidelines; solicitation of real estate offers (properties and funds) through a structured and transparent procedure; selection of identified investments and coordination of the acquisition process; a new-concept Project Monitoring to validate project relevance and the sustainability of the mortgage guarantee value for banks.
EVALUATION AND SELECTION OF INVESTMENTS
LCG Advisory SCF S.p.A. supporta gli investitori istituzionali suoi clienti nella valutazione e selezione delle alternative di impiego del patrimonio.
MONITORING AND REPORTING
LCG Advisory SCF S.p.A. constantly monitors its clients’ portfolios to enable complete control over investment limits, both in terms of allocation and risk and performance budgets. It is the responsibility of LCG Advisory SCF S.p.A. to monitor individual managers to ensure compliance with the terms of the agreement at the time of contract signing with the client and to interact with them as needed.
The reporting produced by LCG Advisory SCF S.p.A. (weekly and/or monthly) results from the ongoing portfolio monitoring and is customized for each client based on their specific needs. It can illustrate any performance and/or risk indicators, from the overall portfolio down to individual securities.
FIA
LCG Advisory SCF S.p.A., as an advisor for Italian institutional investors, was a pioneer in setting up Asset Allocations for its clients to engage in alternative investments (Private Equity, Private Debt, Renewables, Real Estate, etc.). This has allowed LCG Advisory SCF S.p.A., as a first mover in this field, to gain considerable expertise in asset classes that require in-depth investment knowledge and a proven ability to monitor and report specific risks and returns.
ESG
LCG Advisory SCF S.p.A., as a financial advisor, has always considered ESG (Environmental, Social, and Governance) factors as value-added drivers for its clients’ investments. In particular, to ensure that the portfolios under advisory are ESG-compliant, LCG Advisory SCF S.p.A. performs activities such as:
- Support in defining guidelines that govern the Pension Fund’s activity in the field of socially responsible investments.
- Analysis of social and environmental portfolio aspects to identify any conflicts with stakeholders in which the Pension Fund is involved.
- Support in selecting companies involved in serious disputes for engagement activities and the preparation of necessary documentation.
- Assistance in selecting socially responsible financial products.
- Consultation regarding the Pension Funds’ requests regarding socially responsible investments.
RISK MANAGEMENT
LCG, concurrently with the SAA phase, estimates a Portfolio risk budget (maximum limit) based on the results of the ALM analysis, regulatory limits, and the Client’s risk appetite, allocating it to various asset classes and/or segments (Strategic Risk Allocation, SRA).
During the ongoing Portfolio monitoring phase, LCG monitors both ex-ante and ex-post risks, categorizing them into market risks, credit risks, and liquidity risks of individual instruments.
Similar to TAA, when the short-term risk parameters of certain asset classes change, exceeding the limits set in the SRA, tactical adjustments (Tactical Risk Allocation, TRA) are made to the allocation to ensure compliance with the risk budget.
GOVERNANCE SUPPORT
LCG Advisory SCF S.p.A. has always provided support to the governance, operational bodies, and administrative bodies of its clients, both in terms of training (technical and/or regulatory) and in terms of institutional communication and marketing to its members and/or potential stakeholders.
Furthermore, LCG Advisory SCF S.p.A. supports its clients in compliance with regulatory requirements imposed by regulatory authorities, an area in which the team is experienced, both in the preparation of specific documentation and in communications with third parties.
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