Risk management is an integral part of our investment process.
How do we define risk?
Risk is for us the risk of a permanent or at least long-lasting loss (and not the price fluctuation of an asset). Unfortunately, this is not so "easy" to calculate (such as the key figure "volatility").
What does that mean?
On the one hand, we constantly check our assessment and investment decisions. This includes that all portfolios are mapped in our portfolio management tool, which updates the prices via an interface. This enables us to classify the impact of (unexpected) information on the current portfolios at any time. Risk management also includes the daily monitoring of all positions and the overall portfolio risk. This includes risk indicators such as VaR, CVaR or maximum drawdown, but also the monitoring of performance contributions. Stop-loss brands are not used as "hard" exit signals, but as "soft" warning signals.
At least since Harry Markowitz, an American economist, we know that one can reduce risk through diversification ("Don’t put all eggs in one basket"). In addition to the usual diversification practice across asset classes, countries / sectors / segments and position sizes, we focus on diversification across risk factors such as value, growth, quality and momentum. This makes our portfolios more robust and more stable in times of crisis.
Risk budget control
In contrast to rigid risk management systems such as CPPI or VaR, we manage the risk budget flexibly within our portfolios, so that we were able to manage with the risk budget even in very volatile phases such as 2008 or 2011. In other words, the allocation is managed in such a way that the risk budget is always available and market re-entry after weak phases is thus guaranteed.