Our investment philosophy revolves around the belief that prices of financial assets are driven by a combination of liquidity flows, risk appetite, and ultimately, the intrinsic value of the underlying asset. In today’s market conditions, flexibility and versatility to changing factors are key virtues.
Liquidity flows and risk appetite are primary reasons why an asset class move in a particular direction, hence determining how much the price exceeds or under performs its fair value.
Ultimately, asset prices settle at a fair value range,
i.e. their intrinsic values.
The interplay of A and B above on the prices of financial assets in the short and long term provides us the opportunity to maximize the risk-adjusted value.
As the Investment Manager, we will identify economic factors that are anticipated to contribute favorably to a sector or sectors in a business cycle. A sector allocation decision is then made, followed by a selection of individual stocks within these sectors. Preference will be given to companies with sound management practices, resilient business models, strong brand franchise, and attractive relative valuations. At the same time, ‘bottom-up’ stock-picking techniques will also be conducted to filter out stocks which may not be within a preferred sector, yet possess unique qualities that make them attractive investment candidates.
As the Investment Manager, we will seek to achieve consistent, above-average returns from fundamental analysis, as opposed to constant trading. Emphasis is placed on the credit-worthiness of investment-grade issuers and credibility of the management of the respective issuers. For diversification and risk management purposes, the investments will be spread across various favourable sectors, subject to various grids and limits to ensure avoidance of over dependence on a sector or an issuer. In addition, we will manage the duration of an investment portfolio in accordance with the outlook on interest rates.
