Our PMs area aware that exposure to stock market movements in a single country may be significantly affected by political or economic developments, government action or natural events that do not affect a fund investing in broader markets. We incorporate political risks in our evaluation process of individual companies, and try to assess how each company is either directly exposed to political events (i.e. companies in which a government has a significant stake) or is in a sector exposed to political events (i.e. regulated sectors).
Risk management is fundamental to our investment approach. We manage risk from a qualitative perspective through: deep understanding of operating activities, constant interaction with management, avoiding excessive company, market cap and sector concentrations and adjust positions according to liquidity, among others. From a quantitative perspective, risk is monitored and managed daily by and independent risk team with the use of tools and reports, such as VaR, Stress tests, Scenario & sensitivity analysis, Factor risk analysis, Concentration limits, Liquidity and capitalization analysis and Performance attribution.
The team prepares daily reports and has constant interaction with the PM and traders on risk levels.