Our Investment Philosophy
At Crossinvest, we have sifted through the various investment styles and economic schools of thought while ensuring we are not enraptured by any. Instead, we identify the pros and cons of each to navigate changing market environments.
We focus on quantitative data to ground market narratives and ensure investment discipline. However, we are also influenced by Friedrich Hayek’s concept of Unorganized Complexity and note that over reliance on mathematical concepts can lead to fragility of portfolios precisely in periods where it is most dangerous to be.
It is not only generals but also financial managers who fight the last war. We constantly question ourselves to ensure our investment approach is still relevant under current market conditions.
A key pivot of our portfolio construction is bridging theoretical concepts with practical market conditions to ensure the conception of ideas is not sterile and the application of them is not still-born.
- Determine the macroeconomic conditions and the investment outlook for each asset class
- Create the desired asset allocation based on volatility expectations to achieve a strong risk reward profile
- Combine our macro views and bottom-up analysis to build a robust portfolio
- Identify key drivers of risk and ensure risk is balanced and at an acceptable level for different market outcomes
- Ensure a balance of safe assets with risky assets to allow for capital protection and flexibility during sudden and sharp market movements.
- Conduct bottom-up security and fund analysis to identify the best positions within the defined macro asset allocation framework
Portfolio Monitoring & Risk Management
- Monitor each position for changes in trend and fundamental rationale
- Monitor each risk factor of the portfolio for possible changes in market direction
- Monitor market developments and how they may affect portfolios
- Adjust portfolio risk profile and exposure should technical, fundamental or macro views change
We construct portfolios to include individual bonds, direct equities, funds, ETFs, alternatives or a combination of all.
We believe that outcomes within financial markets are highly unpredictable. However, by understanding initial conditions, the nature of the system and possible catalysts, we can position portfolios to minimize the impact of negative outcomes and capture the upside in a strong risk-adjusted manner.
One of the main aspects to achieving this is studying macroeconomic trends to understand the conditions financial markets are operating within, thus allowing us to take risk during the most conducive environments.
Identify key drivers of risk in the portfolio and ensure risk is balanced as well as at an acceptable level for each market condition.