NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended 31 December 2022 into consideration; • determining the optimal blend of selected managers within the portfolio through a portfolio construction and optimisation process; • writing segregated investment mandates with selected managers to tightly control portfolio risk; • continuous monitoring of the portfolio risk and return characteristics of each selected manager as well as of the overall portfolio; and • making manager changes where PPS Investments feels this is in the best interest of investors. The Collective Investments Scheme Control Act also imposes specific restrictions which the underlying managers have to comply with and also restricts the interest rate and credit risk, where applicable, that they are able to take. a. PPS Conservative Fund of Funds Investment objective To maximise total portfolio return while outperforming a conservative return target of CPI + 2% per annum over the medium term. Investment mandate This multi-managed fund invests in a number of underlying managers with the specific mandate to employ real return strategies to provide real capital growth. Flexible asset allocation provides diversification across all asset classes and sectors, with equity exposure limit to not more than 40% of the portfolio value. Typical investments The managers invest in fixed instruments such as money market and bonds, as well as local and international equities. Risk exposure A conservative fund exposed to credit risk, interest rate risk, local and international equity price risk and currency risk. b. PPS Moderate Fund of Funds Investment objective To maximise total portfolio return while outperforming a moderate return target of CPI + 4% per annum over the medium term. Investment mandate This multi-managed fund invests in a number of underlying managers with the specific mandate to employ real return strategies to provide real capital growth. Flexible asset allocation provides diversification across all asset classes and sectors, with equity exposure limit to not more than 60% of the portfolio value. Typical investments The managers invest in fixed instruments such as money market and bonds, as well as local and international 39. Management of risks (continued) 39.3 Financial risk management (continued) 194 Notes to the Consolidated Financial Statements
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