Our CorePlus approach to portfolio
management consists of both strategic and tactical investing,
the mix of which varies and is dependent upon market opportunities
and volatility. Our CorePlus process consists of both top-down
and bottom-up research and analysis. Our top-down analysis influences
our asset class, country, and sector weightings while our bottom-up
analysis determines the specific securities in our portfolios.
We constantly research and
monitor a large number of securities across many asset classes,
and we never force the process. When there are too few compelling
opportunities available, we are content to keep excess funds in
cash-like investments and patiently wait for better opportunities
to arise.
The
Strategic Component ("Core")
The strategic portion of each portfolio consists of longer-term
positions that we initially expect to own for at least 1-5 years.
These are securities that we determine are mispriced relative
to their fundamentals, and they include both long and short positions.
The greater our conviction, the larger the position size. These
positions typically constitute the majority of each portfolio.
Our strategic positions are
driven by our fundamental research, our economic analysis, and
our valuation work. Just as important is our ability to patiently
wait for our thesis to unfold. We expect these positions to perform
very well over time on an annualized basis, and they tend to have
significantly more long-term reward potential than risk.
The Tactical Component
("Plus")
The tactical portion of
each portfolio adds a very flexible, dynamic, and opportunistic
overlay to our strategic component. Certain of these tactical
positions are meant to exploit short-term opportunities while
others provide shorter-term protection to a portion or all of
the portfolio. We expect to own these positions for less than
one year. Our tactical positions include:
- Non-core securities which we find
to be mispriced and which provide a compelling trading opportunity
and risk/reward trade-off
- Additions to "full" core
holding positions on a price pullback with an eye towards selling
this "excess" position on a rebound
- Securities used to hedge specific
core holdings
- Positions used to adjust our short-term
asset class, market, or net long/short exposure
