A Risk Management System that Works
Journal of Investing · Jun 30, 2019Journal of Investing · Jun 30, 2019
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A risk management system should, at a minimum, explain asset class behavior and provide useful insights. Most current methodologies fall short in either one or both areas. They have inconsistent explanatory power and offer little or no insight, forcing portfolio managers to resort to blind faith. How else can one explain the calamity that befell prominent institutions during the Great Recession of 2007/8?
Understanding the sources of risk is a critical component in managing it. An economic factor model provides this much needed understanding. It not only explains price behavior of diverse assets, but does so in an intuitive manner.
It is our expectation that a better understanding will result in more resilient portfolios, limiting the drawdowns from market corrections and producing more satisfactory outcomes. We also envision novel uses arising from such a system that are heretofore not practical or feasible.
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Investment
Process
Our investment process utilizes three key attributes to manage the return, risk and costs of every portfolio
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Discipline: We test and verify risk and return characteristics of the portfolio
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Objectivity & Consistency: Our approach is analytical and methodical. It is not influenced by whims, trends, or emotions.
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Competency: Decades of experience and proven track record have earned us the trust of our clients. They are the core of everything we do.