Risk and control
Risk and control are important for all investment funds. Absolute return funds, however, are slightly different as we have to understand the impact of volatility on our derivative positions and how all our investments interact within the fund.
In managing GARS, we do not use conventional asset allocation limits, which are inflexible. Instead, we look at the individual contribution of each strategy to GARS’ total investment risk. This ensures that all investment strategies are monitored on a consistent basis. We set limits to ensure that no individual strategy e.g. exposure to UK equities, or group of strategies e.g. exposure to equities generally, dominates its risk profile. As such, the risk limits ensure the portfolio always holds a diversified set of investment risks no matter how strong our conviction may be on any one asset class.
This approach gives three main benefits:
- We only invest where we clearly understand the risks
- By understanding how individual strategy risks interact, we can build a truly diversified portfolio
- Key risks can be clearly communicated to investors.
Related resources
Training modulesThe information contained on these pages is for investment professionals only and must not be relied upon by anyone else. This Fund is not guaranteed, a capital protected product or a substitute for cash. The value of your investments can go down as well as up. In order to achieve its investment objectives the Fund will make extensive use of derivatives.
For full details of the fund's objective, policy, investment and borrowing powers and details of the risks investors need to be aware of please refer to the full prospectus.
