Risk-based investing puts your tolerance for losses at the heart of the investment model.
Instead of asking how much you want to earn from your investment, we ask what is the maximum amount you are prepared to lose. We then translate this into a risk budget and calculate a return target based on the concept of expected shortfall: the average loss that a portfolio would experience in the worst year out of twenty. When the value of a portfolio falls, we adjust its exposure to cushion the losses.
Because different asset classes perform well at different phases of the economic cycle, we seek to build portfolios that adapt quickly to periods of economic growth, inflation or downturn. Depending on the way markets move, we can adjust the allocation daily if necessary.
Our risk-based approach was launched for our own Swiss employees’ pension fund in 2009; we then expanded it to serve our institutional clients. Today we offer it to our private clients as well.
Our innovations haven’t gone unnoticed. A leading publication, ‘Investment & Pensions Europe’, named our approach “Best Pension Fund in Switzerland” in 2012 and again in 2013.