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Insight - Making Sense of the Narrative


Our own experience confirms that most of the problems facing active fund managers are structural to the industry, ironically largely a result of risk management processes that limit the ability to vary benchmark risk according to market conditions. The model portfolios we discuss here on Market Thinking have been built over the last three years to explicitly avoid these issues and look to take the appropriate level of risk in both high conviction and low conviction markets - our definition of conviction being the scores we create as part of our market thinking process at the portfolio component level. As more than 2/3rds of the time we are in such markets, we see this as a key part of generating long term returns while having lower volatility and downside risk.

This is a video I recorded with Neil Shah at Vantage around three weeks ago when I was passing through London. Similar to the CISI subject but with more detail on the work we are doing with Toscafund.

The top down case for European Banks – this time it really is different...

Bringing together our series on Model Portfolios, we show how a balanced 60:40 Portfolio of Equities and Bonds based on our Global Bond Model Portfolio combined with either our Global Equity Factor Model Portfolio (Portfolio 1) or our Global Equity Theme Model Portfolio (Portfolio2) show different risk return profiles, but both show better returns with much lower risk than the benchmark.

In this note, we look at how we can construct a different Global Equity Model Portfolio using the same process of Conviction Scores and Dynamic Allocation, but looking instead at a diversified portfolio through the lens of ‘Global Themes’.