Managing risk is a cornerstone of portfolio management at Heartwood Investment Management.

The first step is to help you assess your clients’ individual appetite and capacity for risk, to suggest a suitable Investment Strategy.

Next, we apply various risk controls to our tactical asset allocation. Understanding where risk lies in each portfolio gives us the confidence to take an appropriate degree of risk where we think it has the potential to increase returns.

We also control the risk both when selecting individual investment vehicles and when combining them with other investments in a portfolio.

Key risk management tools

• Tracking error controls manage risk at both asset allocation and individual security level.
• Concentration limits restrict exposure to individual fund managers and groups.
• Our soft stop-loss policy prompts us to reassess positions if a holding underperforms relative to its benchmark index.
• For currencies, we pursue a risk-minimisation strategy, taking currency implications into account when allocating assets.
• Our proprietary portfolio control module will monitor your clients’ portfolios daily to ensure that they are managed in line with the Investment Strategy.
• Detailed monthly performance attribution shows the outcome of all investment decisions and the level of risk in our portfolios.