Risk Management
Sana views risk as the uncertainty of future preferred outcome and defines investmentrisk as the probability of capital loss and /or failure to meet a real return objective over the investment horizon.
Defining risk as volatility of returns without reference to a specific investor profile and investment horizon is grossly misleading. Short-term volatility is to the stock market what the heartbeat is to a living creature: it is a necessary aspect of the proposer functioning of the market. It cannot be completely eliminated without sacrificing the superior long-term returns of equities versus other asset classes.
Managing investment risk, instead of avoiding it, is fundamental to the delivery of market beating returns. Long-term successful investment is equally – or even more – about avoiding losers than the rare ability of picking future winners. Momentum investing endeavors to select future winners, while fundamental analysis uncovers and avoids potential losers
Our portfolios are therefore constructed of momentum stocks that are underpinned by strong fundamentals. This balanced combination tips the scale towards superior investment outcomes. Avoiding losers, and thereby preserving clients’ capital, is key to our risk management philosophy. Risk management is embedded into our portfolio construction process.
Favorable es post quantitative risk measures are a result of our process to limit downside risk rather than a stated target. Our focus is on ex ante risk mimisation through proper risk decomposition and attribution At the core of our risk management process is prudent investing through construction of portfolios with non or low correlated assets to achieve desired diversification.
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