Our investment process has three phases; the allocation, selection and management of risk as shown in this image.
We set an investment plan that provides a risk budget aligned with our investors’ and funds’ tolerance for risk and our view on the absolute value available in the market from various investment decisions.
We select risks on the basis of quality first, then price and are focussed on identifying durable income streams with the potential for growth. We price the income stream using a long-term view of risk, not short term momentum asking what an asset is worth, not what will the market pay.
We manage the bundle of risks within the portfolio on a day-to-day basis to maximise the return given those risks, or to change those risks to exploit market circumstances. A performance and attribution review is carried out as part of the annual investment plan. Performance is the market’s compensation for the risks that have been taken. We learn from the decisions we have taken through the analysis of subsequent performance.