Controlling risk is one of the cornerstones of sound portfolio management. Most clients are unwilling to risk large declines in the value of their portfolios, which is why we focus on understanding the level of risk we are taking at every step of our process.

Risk is not in itself a bad thing: riskier investments tend to produce stronger expected returns over the long term, although this cannot, of course, be guaranteed. Identifying exactly where risk lies in our portfolios helps us to take risk only where we see its potential to increase the level of returns.

• Tracking error controls manage risk at both the asset allocation and the individual security level.
• Concentration limits restrict our exposure to individual fund managers and groups.
• Our soft stop-loss policy makes us reassess positions if any holding underperforms relative to its benchmark index.
• For currencies, we pursue a risk-minimisation strategy, taking currency implications into account when allocating assets.
• Clients’ portfolios are continually monitored to ensure that they are managed in line with the Investment Strategy.

Detailed monthly performance attribution reveals the outcome of all investment decisions and the level of risk in portfolios.