Global Balanced Risk Control Strategy: Total Portfolio Risk Control
Global Balanced Risk Control Strategy: Total Portfolio Risk Control

Global Balanced Risk Control Strategy: Total Portfolio Risk Control

 
 
 
Summary

The Global Balanced Risk Control (GBaR): Total Portfolio Risk Control Strategy applies an integrated approach to global balanced investing within a risk-controlled framework. The Strategy aims to manage total portfolio risk as defined by value-at-risk (VaR) or volatility metrics, while simultaneously seeking to enhance returns from tactical insights into global markets. Portfolios within the Strategy seek to achieve a target risk for the total portfolio, while still benefitting from any alpha generated from tactical asset class views. The team uses its top-down research process, involving fundamental and quantitative analysis across asset classes, to determine active positions.

2009
Strategy Inception
Customizable
Total Portfolio Risk Target
EUR
Base Currency
 
 
Investment Approach
Philosophy

The team believes that their top-down macro investing approach combined with explicit, quantitatively driven risk control delivers excess returns, as well as reducing downside risk in volatile markets. They believe that given the flexibility of the Strategy, it can act as a standalone investment as well as a risk control ‘buffer’ within a larger portfolio which is aiming to manage total portfolio risk. 

 
Differentiators
Designed to Perform in All Market Conditions

The team seeks to provide a measure of downside protection in volatile markets and upside participation in growth markets. 

Unique Approach

Rigorous quantitative risk analysis is combined with the team’s own macroeconomic views to create a unique and dynamic approach to balanced investing. 

Attractive Risk-Return Target

The team invests across a wide investment universe, focused on providing diversified, risk-controlled exposure to a broad range of global asset classes. 

 
 
 
Investment Process
1
Risk Profile

All GBaR mandates are customisable to help meet client objectives regarding targeted risk, investment restrictions, and other requirements. Once the portfolio’s volatility target has been determined, the team dynamically manages a broad asset mix to help meet that target.

2
Tactical Positioning

Employing its top-down research process combining fundamental and quantitative analysis, the team develops tactical insights, which in turn are used to determine preferences within each asset class. 

3
Quantitative Implementation

The team’s quantitative implementation takes advantage of the tactical insights in a risk-controlled framework. The team translates tactical positions into expected returns, using quantitative techniques to construct the portfolio. Its disciplined risk management ensures that the expected total portfolio risk is consistent with the agreed risk constraints. 

 
 
Portfolio Managers
Managing Director
36 years industry experience
Executive Director
10 years industry experience
 
 
Insights
Market Outlook
Calm Before the Storm
Oct 23, 2017
A number of storm fronts are forming off the coast of what is otherwise a sunny economic environment, from rising rates to debt and politics. Investors need to have a plan for taking shelter.
Macro Insight
It’s a MAD World
Sep 22, 2017
Despite the relative quiet in recent weeks, we expect the standoff between the U.S. and North Korea to escalate before it is resolved, and think it is prudent to put in defensive positions and reduce exposures to volatility and higher-risk areas.
Macro Insight
Japan: Major exporter to large economies
Jun 12, 2017
The world’s third largest economy is fundamentally dependent on the world’s two largest – U.S. and China. Oil prices play a role, too.
 
 
 
 

RISK CONSIDERATIONS  

Diversification does not protect you against a loss in a particular market; however, it allows you to spread that risk across various asset classes. 

Past performance is not a guarantee of future performance. There can be no assurance that the Strategy will achieve its investment objectives. Portfolios are subject to market risk, which is the pos­sibility that the value of the investments and the income from them can go down as well as up and an investor may not get back the amount invested. Accordingly, you can lose money investing in this strategy. Please be aware that this strategy may be subject to certain additional risks. There is the risk that the Adviser’s asset allocation methodology and assumptions regarding the Underlying Portfolios may be incorrect in light of actual market conditions and the Portfolio may not achieve its investment objective. Share prices also tend to be volatile and there is a significant possibility of loss. Concentration in a single region may make the portfolio more volatile than one that invests globally. The portfolio’s investments in commodity-linked notes involve substantial risks, including risk of loss of a significant portion of their principal value. In addition to commodity risk, they may be subject to additional special risks, such as risk of loss of interest and principal, lack of secondary market and risk of greater volatility, that do not affect traditional equity and debt securities. Currency fluctuations could erase investment gains or add to investment losses. Derivative instruments can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on the portfolio’s performance. The risks of investing in emerging market countries are greater than the risks generally associated with investments in foreign developed countries. In general, equity securities’ values also fluctuate in response to activities specific to a company. Fixed-income securities are subject to the ability of an issuer to make timely principal and interest payments (credit risk), changes in interest rates (interest-rate risk), the creditworthiness of the issuer and general market liquidity (market risk). In the current rising interest-rate environment, bond prices may fall and may result in periods of volatility and increased portfolio redemptions. Longer-term securities may be more sensitive to interest rate changes. In a declining interest-rate environment, the portfolio may generate less income. The use of leverage may increase volatility in the Portfolio. Stocks of small-capitalization companies carry special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies.

 

This communication is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Past performance is no guarantee of future results.

A separately managed account may not be suitable for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required. For important information about the investment manager, please refer to Form ADV Part 2.

Any views and opinions provided are those of the portfolio management team and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

All information provided has been prepared solely for information purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

DEFINITIONS

Alpha is the excess return or value added (positive or negative) of the portfolio’s return relative to the return of the benchmark.

Value at Risk (VaR) is a statistical technique used to measure and quantify the level of financial risk within an investment portfolio over a specific time frame.

Volatility is a statistical measure of the dispersion of returns for a given security or market index.

OTHER CONSIDERATIONS

The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.

The information presented represents how the portfolio management team generally implements its investment process under normal market conditions.

1422937 Exp. 02/28/2017

 

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