Attempting to Preserve
Capital and Protect Assets
We are strong believers in the necessity to manage risk, your well planned efforts to limit excessive drawdowns should be a part of your investment process. We use specific methods of measuring risk and have a menu of risk avoidance strategies that we will present for your approval. As stated above and below, we believe our risk management philosophy and process to be what set us apart from our competitors.
A well-designed strategy must evolve with the industry’s best thought leadership and be formalized into best practices. Incorporating risk management plans into your process and considering small, mid-cap and emerging markets strategies
We are risk managers at our core and have developed specific methods of measuring and managing risk. We suggest taking an appropriate amount of time together to understand our risk management capabilities, choose those that are appropriate for you and begin to integrate a plan into your investment process. Accordingly, we like to discuss risk-adjusted returns as much as absolute and relative returns.
Our process is built around the concept that your portfolio should be positioned for an appropriate increased level of risk when the economy and earnings are expanding and then become more conservative when earnings are contracting. We establish acceptable tactical risk/return relationship ranges around your strategic allocation, allowing us to move up and down the risk curve, within your IPS guidelines, depending on where we are in the business cycle.
Good risk planning allows investment committees to make rules-based decisions effectively during very difficult circumstances.
There is no assurance any investment strategy will be successful. Investing involves risk including the possible loss of capital. Small and mid-cap securities generally involve greater risks and are not suitable for all investors. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. Asset allocation does not guarantee a profit nor protect against loss.
Our post-modern portfolio theory incorporates downside risk in order to attempt to achieve more efficient optimization in the medium and long-term. This requires a much more robust measurement of risk such as the statistical probability of the impairment of principle, such as using Conditional-Value-at-Risk [CVaR] to better define and measure risk.
There is no assurance any investment strategy will be successful. Investing involves risk including the possible loss of capital.
We believe it is critical to measure risk appropriately in order to understand it. We suggest all of our clients have a risk measurement and management plan approved, and in some cases, incorporated into the IPS.