The portfolio's design is driven by a detailed assessment of market valuations, macro-economic fundamentals, risk premia and liquidity, resulting in a dynamic asset allocation. The investment approach allows the portfolio to respond to changing market environments, both capturing opportunities and containing risks relative to the objective.
There are two key elements to our process:
1. Neutral Asset Allocation:
– The first step of our Neutral Asset Allocation process is to set the economic climate
– We use the economic climate assumptions within our proprietary models to determine forward looking expected returns.
– The process of determining the Neutral Asset Allocation uses these expected returns for the building blocks of the portfolio allocations incorporating the return objectives, constraints, and investment horizon of the portfolio.
2. Dynamic Asset Allocation:
– Our Dynamic Asset Allocation process takes into account the shorter-term market dynamics to deliver additional returns and seek to abate portfolio risks.
– This part of our investment process is formally reviewed each week and looks at (among other things) markets to take advantage of possible dislocations.
– We have the ability to increase or decrease our Neutral Asset Allocation and Dynamic Asset Allocation dependent on market conditions to maximize the probability of meeting the return objective.