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Managing and understanding risk — how do you estimate risk, and how does it impact your investment process? - Alain Groshens

Name: Managing and understanding risk — how do you estimate risk, and how does it impact your investment process? - Alain Groshens
Uploaded: Apr 16, 2019

Alain Groshens of SystematicEdge

Apr 16, 2019

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1. Managing and understanding risk — how do you estimate risk, and how does it impact your investment process?

Video transcript

1. Managing and understanding risk — how do you estimate risk, and how does it impact your investment process?

With respect to risk, every single aspect of our strategy has very clear risk strategy return objectives. That means a very clear risk budget in terms of volatility, but in terms of draw-down as well. Every single element of our strategy is basically hedged on the downside. We are a multi asset manager. That means we have equity, commodity, foreign exchange and fixed income, that means hedging the downside is very key. What we're looking at very specifically on top of the specific risk of each asset is the market risk sentiment. It means that if the market risk sentiment is negative, but you are right at the fundamentals, you need to be hedged. On the other side, if market risk sentiment is positive, like at the beginning of this year and the market is really taking off and rallying, although fundamentals are decreasing or being negative, obviously, you need to be hedged on the downside as well. And also, if market risk is positive and your fundamentals are positive, then you can be more aggressive.

Managing and understanding risk — how do you estimate risk, and how does it impact your investment process? - Alain Groshens

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