|How do you decide sector allocations and weightings?|
Again, driven primarily by our macro direction – our portfolios are at first weighted accordingly into the 3 primary sectors and the relevant sub-sector groups below.
Equity sensitive sectors (therefore stock market sensitive)
Commodity and therefore demand / supply and policy sensitive
Alpha or trend sensitive sectors (showing negative bear market correlation to equity sensitive sectors above)
Then, based on our monthly macro views, we will allocate accordingly to any sector with the practical deployment of new investment proceeds, redemption proceeds as well as quarterly profit taking, thereby allocating investment capital strategically to the sectors that show the most potential for the coming quarters while taking profits or reducing allocations to sectors that have experienced outliers and are set to correct.
Click here to view a visual illustration (Registered users)
The allocation process is furthermore impacted by the underlying manager’s own ability to deploy capital profitably and by our unmoving desire to avoid downside volatility. If global policy dictates an uncertain quarter for certain sectors (for example carbon and emissions), we purposely limit our exposure immediately, simultaneously allocating free capital to sectors that show a promising growth period.