Although we do not take a top-down approach in picking shares, we recognise that our approach could result in concentration in certain sectors, countries or other characteristics. Our risk management process is designed to identify and quantify these exposures, and to alert the investment team in a structured, systematic way.
A formal risk report is delivered to the investment team periodically, detailing key exposures and including recommendations to improve the risk profile of the portfolios. These reports highlight where the Fund may be taking too much or too little risk, and are followed by a meeting to discuss the key insights and recommendations. This includes scenario analysis of how the portfolio might perform if there was a repeat of previous market drawdowns. Our quantitative analysts also provide proprietary tools and analysis to the portfolio management process that are available in real time. While some of the previous market drawdowns were ESG-related, e.g. following the Kobe earthquake of 1995, this analysis does not assess future ESG factors or climate-related risks and opportunities.