How we manage risk

Our flexible mandate allows for an unconstrained approach to investing, meaning effective risk management is essential to construct a well-balanced portfolio.

Our rigorous process is designed to produce a healthy risk-adjusted return over the long term. Through continuous monitoring and our proprietary models, we identify, evaluate and mitigate existing and developing risks. This involves careful consideration of macroeconomic and geopolitical trends, as well as investment-specific factors, utilising both qualitative and quantitative methods.

How we manage risk in our portfolio

Ensuring we have sufficient capital deployed to generate long-term growth naturally results in us being exposed to market risk. To dampen the impact of market volatility on our portfolio, we have set parameters around net exposure levels across all asset classes, including equities, credit, private investments, currencies and commodities. We monitor these on an ongoing basis.

We have a global portfolio, which means that we translate these global assets back to sterling. Currency risk is managed at a portfolio level. We use a combination of forwards and/or options to adjust the underlying currency exposure of our investments to achieve balance across the overall portfolio.

Our flexible mandate enables us to construct a portfolio that is diversified across different themes and sectors. We actively manage concentration risks in the portfolio, so that no particular sector, theme or single investment has a disproportionate impact on the overall portfolio.

We are constantly on guard for tail events, which if not managed appropriately can prove very costly for a portfolio. We manage this risk through a combination of options and other derivatives, which act as insurance protection against events that are unlikely but potentially material.