„It ain’t what you don’t know that gets you into trouble.
It’s what you know for sure that just ain’t so.” Mark Twain
Sautterinvest uses the insights of leading investment organizations and third party experts, to formulate the firm's view on portfolio positioning. However, we also do our own financial analysis and research concerning stock/fund selection and asset allocation.
As companies increasingly derive income from sources outside of their home country, it may be misleading to look at issuers' domiciles (mkt. cap.) to determine a portfolio's regional exposures. MSCI World, for expample, has zero exposure to Emerging Markets under its domicile-based methodology. However, when rebalanced on a revenue basis, exposure to emerging markets reaches over 18%. Investors concerned that they may be missing out on EM exposure by choosing a developed-market benchmark for their portfolios may find they have considerable indirect exposure after all. Analysing companies' revenues by region instead of headquarters can significantly alter the apparent composition of an investment portfolio. From an active-management perspective, understanding revenue sources makes sense as stocks are typically valued on estimates of future income.
|MSCI World Index (30.6.2012)||Domicile %||Revenue %||Diff. ppts|
|Asia/Pacific ex Japan||5.6||4.2||1.4|
|Sector Weightings||MSCI World %||30.11.2015||Rec.|
|Consumer Staples||11.4||defensive non-cyclical||O/W|
Funding an absolute return strategy depends upon investor goals
The goal of absolute return strategies is not to be the highest returning asset class, but to provide higher efficiency with lower equity beta. This analysis provides strong evidence that unconstrained, benchmark-agnostic strategies that focus on more efficient returns with less systematic risk (beta) can be a powerful tool for improving the efficiency of an investment plan.
Prudency is the starting point for our strategy.
We do not track
indices closely. Instead of focusing on relative risk, we look at absolute risk, while the whole finance industry is concentrating on benchmarks.
And closely following a benchmark isn’t necessarily in clients’ interests. For both individual and institutional investors, preservation of capital is more important.
investors, such as pension funds, our focus on lower risk is also attractive because it can help stabilize funding ratios.
So prudency isn’t just part of the strategy, it’s also part of our investment philosophy.
Active investment management is about blending your portfolio with low-volatility strategies and the inclusion of value and momentum factors, which has proven very effective over the past years.