We believe that a transparent and intuitive portfolio construction framework makes for more focused team interactions, better decision making and better risk outcomes. All our portfolios can be considered as an interaction of three distinct components:
- Fundamental research aimed at delivering standardised valuations and conviction scores. Unconstrained portfolio weights are generated purely on the basis of these fundamental research outputs;
- Model portfolios based on fundamental research that differ only in their construction benchmarks, risk constraints and yield constraints; and,
- Hedge overlays aimed at reducing market exposure and adding incremental alpha.
Importantly, all components are generic and scalable across the four individual strategies we manage on behalf of clients. Strategy specific parameters are incorporated in a systematic and transparent manner imposing little diversion from alpha generating activities.