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Investment Philosophy and Process

We actively manage our portfolios to seek out return opportunities and avoid unrewarded risks. Risk budgeting against cash, client or market benchmarks is central to our approach.

Active management is key to adding real value, as there are potential inefficiencies within and between markets. Motivations, behaviours and horizons of investors are constantly changing and potential information shocks and event risks are ever present.

Risk budgeting is essential for capital preservation and consistent performance. Our neutral position can be cash, a market index or an agreed tailored benchmark.

Active risk taking relative to neutral position is budgeted with reference to agreed return target and client risk tolerance. The impact of active decisions on tracking error is continually assessed.

Investment Process

Macro-economic forecasting

  • Explicit point forecasts of growth, inflation, current account, budget deficit and interest rates
  • Formal ‘ground-zero’ re-evaluation of the global economic outlook every quarter

Bond and currency market expectations

  • Currency forecasts based on a balance of fundamental and technical analysis by Investment Team
  • Formal estimates of the trading range for major currency pairs based on specific scenarios

Agreed House View

  • Consistent across teams with market and macro insights
  • Market forecasts, shape and position of yield curve in all key markets

Risk budgeting and portfolio positioning

  • Enhanced portfolio yield through exposure to high quality non-government securities
  • Driven by economic views / levels of swap spread

Portfolio monitoring and performance

  • Continuous assessment of sources of risk and return relative to expectations