In our judgement, most investors are best equipped to focus their efforts on policy decisions such as determining an appropriate asset allocation structure, and establishing an investment policy statement.
In many cases, a traditional investment approach incorporates too much risk and increases the likelihood of unintended risks in a portfolio.
Defensive Approach
In stark contrast, our approach relies on building highly diversified portfolios that include unique and uncorrelated strategies that have well-defined risk and return characteristics. This is a defensive approach which expressly aims to minimize volatility and preserve capital. Our aim is to thoroughly understand the underlying sources of risk/return potential inside a portfolio. Controlling risk enhances both wealth preservation and wealth creation.
Portfolio returns should be largely skill-driven, rather than market-driven:
Returns generated by a manager are attributable to risks taken and skill of the manager
Investing requires exposure to various factors (i.e. sources of potential risk and return)
Portfolios are a collection of assorted risk exposures
There is a large universe of strategies with a wide range of risk/return characteristics
Portfolios should be comprised of managers and exposures containing relatively uncorrelated risks
