Equity Strategies

Purpose

Equities represent ownership in operating businesses. Over long horizons they have historically been the principal source of real growth in diversified portfolios, and also the principal source of volatility. The purpose of an equity allocation is defined at the mandate level before individual exposures are considered.

Approach

1. 01

   Assess businesses on the durability of their economics, balance-sheet resilience and quality of capital allocation.

2. 02

   Treat valuation as a discipline rather than a signal: the price paid determines part of the return.

3. 03

   Consider position sizing as a risk decision, distinct from the decision to own a business at all.

4. 04

   Review the original investment reasoning periodically and act when it no longer holds.

Where it fits

Primary growth exposure; typically the largest source of portfolio volatility.

• Portfolios with a long enough horizon to absorb periods of significant drawdown.
• Mandates where growth of capital is a stated objective.