Greg Woodhams, CFA, Chief Investment Officer, U.S. Growth Equity – Large Cap
“Active risk” describes the portfolio manager’s attempt to outperform a market benchmark (create alpha) and can be broken down into security selection, sector allocation, and a number of other risk factors, such as style and momentum, among others. We believe using stock selection as the principal tool for alpha generation has advantages for generating higher, more consistent risk-adjusted returns.
What’s In Your Risk Bucket?
In manufacturing, a product is deemed effective if it performs consistent with the expectations set by the manufacturer and customer at the design phase. We can use that analogy in investing with our large-cap growth products. Keys to a successful investment product are 1) clearly enunciating the portfolio’s alpha generation strategy; 2) having the commitment and discipline to manage the portfolio consistent with that strategy; and 3) having the appropriate tools t