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Cardano Risk Management

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

The starting point for Cardano's portfolios is the following investment beliefs:

  • Changes in asset prices can largely be explained by changes in:
    • Growth expectations
    • Inflation expectations
    • Risk premia
    • Risk free rates
  • Markets are inherently cyclical with strong feedback loops, but they are too complex to be predictable
  • More modest returns can be sufficient when compounded over time, if large losses can be avoided
  • An investor should accept market risk only when expected returns offer sufficient compensation
  • Excess returns are available to investors who can identify mispricing

These investment beliefs define our approach to portfolio construction:

  • Economic scenarios are used to articulate views and construct portfolios
  • Economic conditions are transposed onto simplified models of economic regimes, but with limited reliance on assumptions (e.g. correlation) 
  • Manage drawdown risk
  • Allocate risk actively, using the full opportunity set i.e. asset classes, strategies, managers, instruments
  • Incorporate best-in-class active managers, as long as net performance is compelling

By taking the above steps, Cardano is able to perform its fiduciary duty to clients by employing a risk-controlled, robust approach to carefully grow assets relative to clients' liabilities.  ESG factors are considered alongside financial risks to positions to ensure a holistic view of the portfolio is taken.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Cardano believes in responsible investment. In so doing, Cardano acknowledges the importance of Environmental, Social and Governance (ESG) factors in risk adjusted investment outcomes. Cardano gathers information and assigns overall ESG ratings to each Cardano-advised invested manager and relevant direct investments, which are made available to clients. ESG factors are integrated into investment decisions where such factors could have a financially material impact on the risk and or return to the client.

 

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk (Private)


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

02.3. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.


The purpose of the Conflicts of Interest Policy is to ensure that all appropriate steps are taken to identify and manage conflicts of interest that arise in the Cardano business, and where necessary make disclosures to impacted clients. This ensures the ongoing fair treatment of clients and reduces the risk of legal liability, regulatory censure or damage to Cardano’s commercial interests and reputation. The conflicts of interest policy identifies actual and potential conflicts arising within Cardano and procedures for managing those conflicts. Everyone in Cardano (including contractors and any other person directly or indirectly linked to us by control) involved in the provision of investment services to Cardano’s clients must adhere to the policy.
 

 

03.3. Additional information. [Optional]

Our conflicts of interest policy can be found here: https://www.cardano.co.uk/legal-and-compliance/


SG 04. Identifying incidents occurring within portfolios (Private)


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