For quite some time, institutional equity and fixed income investors have known that US capital markets have been losing market shares to overseas competitors. The US corporate bond market continues to face challenges from Latin American, Eurobond, Far East, and Australian bond markets. US equity markets continue to have declines in foreign initial public offerings, suggesting that they have also become less attractive. Our global strategies take advantage of international equity and sovereign debt markets by utilizing our global "top-down" view of and "bottom-up" approach to debt and equity analysis. These strategies are customized solutions to match each client's objectives, risk tolerance, liquidity requirements, and marginal tax rates for total-return optimization. They may be structured as either a stand-alone portfolio or as an overlay to a fixed income portfolio already managed by SAC. For further information, please read our Disclosure Statements.
- The strategy seeks to provide stable income, principal protection, and an opportunity for long-term capital appreciation.
- The strategy allows investors to diversify their portfolios into high-quality fixed income, international equities, commodities, and forex of investment opportunities all over the world.
- By opening up the equity universe of stocks globally, clients may diversify their portfolios by gaining exposure to companies and industries not represented in the US markets.
- Provides a high degree of liquidity with an asset allocation weighted in high quality securities.
- Asset allocation is driven by a two-tier approach: a "top-down" view of global markets followed by SAC's qualitative and quantitative "bottom-up" approach.
- Top-down duration management is maintained within a band relative to the benchmark. Decision-making points that determine band optimization are based on key macroeconomic data/sociopolitical issues, fundamental research reviewing credit rating sector reports, supply and demand analysis combined with the client's guidelines, diversification requirements, and portfolio benchmarks.
- Bottom-up yield curve exposure is actively managed by senior portfolio managers utilizing quantitative swap models based on historical yield spread relations, relative value, credit worthiness, and potential price and income appreciation of a particular sector and index in the context of our top-down view.
RISK MANAGEMENT STRATEGY
- Utilize a forward-looking approach. Identify, analyze, quantify, and prioritize the types of risk affecting portfolio investments across four dimensions: bottom-up, core, tail and liquidity risk.
- Diversify across multiple risk factors. Identify the acceptable level of risk the investor is willing to undertake to achieve a certain level of return. Target return contribution.
- Focus on risk factors, not just asset classes. Identify where we are within the risk cycle, seek asset classes that provide more upside or help to avoid or control downside volatility within the cycle.
- Analyze correlations and active risk for impact of market movements on portfolio risk targets.
- Utilize tactical indicators to capture sentiment and turning points.
- Add uncorrelated or negatively correlated assets as diversifiers during downturns, i.e., TIPS, cash, gold, and other commodities.