We initially seek an investment rate of return (IRR) of 15% p.a. Sustainability factors are also considered at this stage of the process. The Universe List consists of approximately 250 companies of which the majority we seek a 15% p.a IRR. Companies with a 1 rating have the greatest predictability and better corporate governance. For these businesses we only seek a 12.5% IRR i.e. we will accept a lower margin of safety due to lower risk factors being present. The majority of companies are rated 2 and a 15% IRR will be targeted. Companies with a 3 rating are those whose corporate governance may leave some concerns e.g. Cayman Islands holding company and as a consequence we look for a 20% IRR. If we have an issue with safety standards, working conditions etc., we would probably not hold the company unless this was being addressed (in which case we would rate it a 3 and look for the higher IRR). The portfolio will be constructed with the lowest risk possible. Given the choice of buying a position offering a 12.5% IRR vs one with a 20% IRR, we would select the former.