At the core of Fusion’s investment philosophy is a disciplined approach to quantitative investment management. Fusion sees its role as identifying long-term sources of risk premiums and extracting these risk premiums in the most cost-effective way. Systematic risk management is an integral part of this process and a key component for achieving optimal return characteristics within pre-defined levels of risk.
Investment Philosophy
Investment Principles
Optimise Costs
Long risk positions, the positions which “harvest” the risk premiums have to be nearly static as excessive trading consumes a large part of positive expected returns. It is known that a large part of the costs associated with investment comes from various transaction costs. Utilizing passive trackers and smart beta products allows reducing trading frequency within the portfolios, driving the costs down.
Protect downside
Investors are more sensitive to losses than to statistical characteristics of the variability of their portfolios. The risk of losses, and more specifically, the risk of unrecoverable losses need to be addressed directly through the utilization of protective products and strategies. Diversification itself is not enough.
Keep it simple and transparent
Both at Asset Allocation and Asset Selection stages we only invest in things which we understand, be this portfolio construction techniques, rebalancing choices or selection of smart-beta funds. If the underlying principle is simple and transparent then there is a better chance that the performance will survive changes in market regimes and cycles
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