We divide our portfolios structurally into three components, irrespective of whether the portfolio in question is globally diversified or geared towards specific asset classes (equities, bonds, etc.):
- Stable, long-term anchor point with focus on cash flows (interest and dividends) with a generally very low turnover rate
- Theme-based component, where tactical changes could have a not insignificant effect
Within equities: Emerging markets, small caps, special situations (such as «out of favour» stocks, event driven situations), technology, biotechnology, etc.
Within bonds: High yield, emerging markets debt, «fallen angels», etc.
- Risk management: cash/liquidity – tactical hedging