Blending art and science, the founding portfolio managers of Picton Mahoney rely on the same disciplined, consistent and repeatable process when constructing and managing client portfolios. They draw on fundamental and quantitative analysis: united in purpose, both disciplines consider similar opportunities and risk factors, but operate independently. This allows construction of diversified portfolios that maximize investors’ exposure to fundamental change characteristics, while risk remains explicitly managed.
Building Picton Mahoney’s momentum portfolio
A disciplined and repeatable three-step process
Fundamental change is the critical factor that provides the foundation of Picton Mahoney's investment philosophy and process. To discover it, PIcton Mahoney employs a unique combination of quantitative models and fundamental research and makes continuous use of leading technology and sophisticated controls to maximize risk-adjusted return potential for clients. It’s a three-step process that delivers results.
|Picton Mahoney's Quantitative and Fundamental teams operate independently, providing recommendations based on their thorough assessments (and back-testing) of specific trends and fundamental change characteristics.|
|The portfolio manager takes the recommended ideas, filtering them through portfolio construction and risk control programs to identify the best opportunities (and respective weightings) for the portfolio.|
|Picton Mahoney monitors portfolios daily to ensure they maintain the right risk/reward balance, in keeping with stated investment objectives. Tasked with this continual oversight are the portfolio manager, Risk Committee and Compliance team.|
Picton Mahoney's investment approach is an excellent complement for traditional value and small-cap strategies. Picton Mahoney's research has shown that blending different investment styles/strategies together leads to higher risk-adjusted returns for investors. This “style diversification” helps smooth overall portfolio returns in the short run, while allowing investors to profit from each strategy’s longer-term performance potential.
Picton Mahoney's Canadian and global funds can play an important role in this process for two reasons:
- The momentum funds tend to act much differently than more traditional strategies. This means that adding momentum to a style-diversified portfolio can lead to better diversification and a smoother ride for investors.
- Momentum strategies have generated strong positive returns over time, which can help improve the overall returns for portfolios.