Equium Capital
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Approach 2

Grounded in a philosophy of equilibrium.

Investment Philosophy

Our consistent results, driven by more than three decades of investing experience, are grounded in a philosophy of equilibrium, one that balances innovation with conservatism and return with risk.  With our wealth invested alongside that of our clients', we are fully aligned and motivated to continue executing this process with a deep level of accountability.

Taking the best elements of traditional asset management and combining them with global macro thinking and tactical portfolio positioning, we avoid the trappings of constrained benchmarks and dogmatic thinking.  This innovative approach, consistently applied with our core principles, allows us to invest only when and where is most appropriate to achieve our clients' goals.

Speaking technically for just a moment, the foundation of our fundamental approach lies in the long history of value and momentum acting as significant contributing factors to alpha generation, both of which have generated excess returns and reduced drawdowns over time. Critically, we combine this bottom-up strategy with a disciplined process of top-down technical rules and risk mitigation techniques.  The combination of these two approaches has historically reduced downside volatility and enhanced capital preservation.

 

In essence, our overarching investment philosophy combines the following core attributes:

 
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Conservatism:  Our most important job is protecting your capital; the portfolios we build and tactical repositioning we do are first designed to manage risk and mitigate losses.

 

Diversification:  Investing has become a globally interconnected endeavour; what happens abroad has direct implications for portfolios at home.  Accordingly, we use a global, multi-asset approach to maximize the benefits of diversification, increase the number of investment opportunities, and best account for risk.

Multi-strategy:  We believe strongly in combining the unemotional lens of technical analysis with the quantitative and qualitative results of deep fundamental research. Using both strategies in parallel increases our ability to protect capital in weak markets and to earn reasonable, above-benchmark returns the rest of the time.


Technical analysis meets fundamental research.

The investment process behind Equium Capital’s consistent returns represents the accumulation and refinement of the founders’ extensive experience around the globe.  Owing to the increasingly volatile and interconnected nature of global markets, we rely on a combination of top-down technical analysis and bottom-up fundamental research in order to best protect and grow wealth through the cycle.

 

Our ability to shift portfolios from a momentum bias to cash and then from cash to a value bias over the course of an investment cycle should add significant value for clients.  Importantly, this tactical approach does not imply fluidity of process, in fact quite the opposite.  In order to reposition portfolios on a timely basis to protect on the downside as well as to capture upside, it is imperative that decision-making be deeply rooted in a consistent, disciplined and unemotional investment process.

 
Value and momentum effects offer higher returns and lower risk when used in combination rather than independently, primarily because value and momentum tend to operate over different time horizons.
— Haghani and Dewwy – (2016) - A Case Study for Using Value and Momentum at the Asset Class Level
 

Investment Process

Using multiple lenses to assess the investments and the market environment helps portfolios participate during market upswings while also better protecting client capital during market declines.  Moreover, any sustainable investment process must be self-reinforcing to maintain consistency and discipline of process.  In other words, it starts where it ends.

1. Portfolio Monitoring
At Equium, that starting and ending point is monitoring risks to the portfolio from global market developments.  Corporate news flow, economic and political developments and monetary and fiscal policy shifts are all constantly managed and scrutinized in order to stay on top of investment risks in real time

2. Technical Analysis
Understanding that all investors, even the professionals, are prone to bias and subjectivity when digesting news, it is critical to use an unemotional lens to compliment any qualitative review. We use technical analysis to remove emotion from the allocation decision and to screen portfolio positions for early warning signs of trouble. 

3. Fundamental Research
Combining this technical top-down perspective on countries, sectors and companies with a fundamentally driven bottom-up research opinion offers the fullest view on investment opportunities around the globe. This hybrid approach reflects industry best practice and has been employed by the investment team to produce a track record of outperformance over many market cycles.

4. Asset Allocation & Portfolio Creation
Using both technical and fundamental inputs and carefully balancing risks and opportunities, the team determines the best asset allocation for the prevailing market environment. With allocation parameters in hand, security selection follows, driven chiefly by fundamental research. Finally, rebalanced portfolios are monitored for deviations from expected behavior as news and markets develop.