Given the main tenet of our philosophy is real return investing, the greatest risk is loss of capital, rather than underperforming an index. There are two areas of risk control embedded within the investment.
It is our belief that risk can only be taken:
- When it is controllable.
- When it is fully understood.
- In areas where we think we have the requisite skills.
- Entry position 1-2%, maximum individual stock 5% at cost for long positions, maximum 3% at cost for short positions.
- Net sector exposure generally no more than 25%.
Portfolio Risk
We aim for lower volatility in the fund and monitor efficiency of risk/return performance by Sharpe Ratio and Sortino Ratio and make use of risk analytics tool Excerpt (EM Applications). These are only tools, however, and do not drive the investment process.
We have a full time risk analyst who provides reports to the fund managers on a weekly basis to ensure they are aware of both intended and unintended risks.