NO FORECASTS, NO PREDICTIONS
When investing, to make returns you have to take risk.
That also means, when you take risk, you make returns. The aim is not to take too much of the same risk or overpay for the risks we take on.
There are only two basic forms of risk. Either you speculate on price and the risk is the value of an asset changing, or you are lending to someone and the risk is the borrower's ability to pay back the loan.
Most investment managers use equities and bonds to get exposure to price and credit risk. Some also use so-called alternatives in an effort to further diversify. Prevailing wealth management models try to predict how equities, bonds and alternatives will perform, to then invest accordingly.
This approach has two underlying fallacies. Alternatives, as broadly defined, can carry the same underlying risks. Furthermore, one cannot accurately and consistently predict future asset prices.
Our methodology is to break down the entire investment universe according to the different forms of credit and price risk. By investing in all the different underlying categories of risk, you are truly diversified and can manage your investment positioning very precisely.
Risk: Governments can't repay their debts
Asset: Publicly listed government bonds
Risk: Asset prices become uncorrelated
Asset: Statistical, fundamental and structural arbitrage trading strategies
Risk: Businesses can't repay their debts
Asset: Publicly listed corporate bonds and private loans
Risk: Asset prices go down
Asset: Shares of companies (public and private), real estate and commodities
Risk: Specific projects can't repay their debts
Asset: Alternative credit, project and bridge financing
Risk: A specific outcome does not occur
Asset: Venture, special situations, and event driven trading strategies
Whereas many people spend time trying to predict the unpredictable, we focus on the things we can control. This allows us to build an investment strategy that is proficient as to where we devote resources and ruthless in seeking efficiency.
We relentlessly endeavour to reduce any costs and fees in the process of executing your wealth management strategy. This is known as the Total Cost of Exposure (TCE) and it includes management & performance fees, commissions, transaction costs, taxes, administration and any other direct, indirect or implied fees.
The TCE can significantly affect where you are on the risk curve and highlights any unwanted or, worse, unrewarded risk.