Investment Process

 

Introduction

Fundamental research is hard work and constantly challenges a team's ability to draw the right conclusions and combine all the different pieces in a compelling and profitable way. Our specialized management teams analyze the most attractive companies in their respective investment universe, draw up detailed financial models and maintain a constant dialog with company executives and leading industry experts.

Our investment process comprises four steps:

 

 

Definition of investment universe

In the first step we define the investment universe in accordance with the given investment goals, i.e., with regard to region, sector focus, market capitalization and liquidity. As an active portfolio manager focused on a consistent bottom-up company approach, we usually broaden our investment horizon beyond the typical benchmark universes.

Generation of ideas and stock selection

A profound ability to connect the myriad dots in their respective field helps our analysts and portfolio managers to form sound opinions. They examine the major fundamental factors of success before analyzing the actual operating results. In this process, our experts evaluate the growth and earnings potential a company has, taking into consideration its market position, product pipeline, innovation strength, brand power and other factors. The resulting facts are then thoroughly analyzed by an extensive network of leading technical and industry specialists to determine their sustainability. This approach sets up apart from many of our competitors and is a key factor for the unrivaled quality of our research capacity. Only in a later step do we draw up and analyze quantitative company models based on classic, fundamental financial data.

Portfolio construction

Once stock selection decisions are made, the optimal weightings are determined using sensitivity and simulation analyses. Company-specific risks should be commensurate with the respective return potential; inordinate risks associated with individual stocks or sectors will be compensated for. To ensure optimal diversification, the correlations of stocks are addressed as are qualitative aspects such as portfolio diversification by including appropriate sub-themes or, in the healthcare sector, for example, by investing in biotech companies whose pipeline products are in different phases of clinical development.

Risk Management

Risk management constitutes an integral part of the overall investment process. Risk management and controlling processes serve to ensure a competitive performance relative to benchmarks and peers, effective management of portfolios with regard to absolute and relative risk parameters and full compliance with external and internal investment requirements. Furthermore, operational risks are continually monitored and the resulting findings gained through this monitoring are utilized to further optimize the quality of asset management operations.