Designed by The Portfolio Consultancy
Trading Strategies designed by our Consultancy are very technical by nature. We have built 11 individual systems that we monitor on a daily basis, and when working with our clients we advise the Finance Houses to combine a number of these systems together to create their overall methodology.
However, we can also advise on individual strategies in individual markets if it suits the entity we are working for/with.
The concept behind our multi-strategy trading systems is to cater for an ever-changing market climate and the strategies are personalised towards the investor’s psychology concerning risk and drawdowns.
Our core belief when designing strategies is that they should be underpinned by a 'trend-following system', as ultimately we aim to be 'on trend'. However, with the market often gyrating in an unpredictable manner, we feel it is vital to factor this potential unpredictability into our strategies that we design. We enable this by incorporating sub strategies which collectively build a portfolio of small multiple high probability trades with added filters to smooth the volatility curve. The filters are the sub-strategies within our core strategy.
These sub strategies are implemented with the aim and objective of building robust portfolios.
The nature of 'trend following' is that there will be some periods where we are wrong (months and quarters) and by advising our client to employ different filters to the overall model, it will also result in 'counter trend' exposure, 'mid term' exposure and 'failed momentum' trades amongst many others.
The result of combining multiple strategies within your overall methodology is it will allow your clientele to minimise the volatility curve when they are underperforming.
We believe any collective system we recommend will have a methodology that is robust, and we believe it will deliver for our client’s year on year. We also have the confidence and are strong enough psychologically to stay militant in our approach towards implementing our strategy even if consensus (or even our client) is saying the opposite.
Our Strategies can't always be right, but we aim to minimise the downside exposure when on the wrong side of the market. Ultimately, the reason we advise that our client operates strategies within strategies is that we believe even in periods of extreme volatility across the market, it will attempt to minimise the volatility curve that it faces.
Technically our system will constantly study multiple timeframes and multiple indicators searching for what we would term 'high probability' trades. The portfolio it builds will consist of numerous small 'high probability' trades resulting in a diversified risk, diversified biases, and a portfolio that is dynamic and is able to evolve with an ever changing market climate.
The key at The Portfolio Consultancy is risk management.
Because the markets our strategies trade in are leveraged and therefore volatile, and can/will witness equity swings.
Hence, it is imperative that the portfolios are structured to reflect a fund’s/investor’s appetite towards risk.
How do all of our systems enable that?
In simple terms, and as well as combining strategies and markets- we enable this via position sizing.
When building a portfolio, our internal systems generate an internal risk rating between 1 and 10 based on an investor’s appetite for risk. Once we ascertain the risk parameters, our asset allocation team will advise our clients how to position size the trades and portfolios to reflect the risk rating and build the correct composition accordingly. Therefore, once a system is designed for you, it can be incorporated for all clients and all risk appetites via modifying the increments of each buy/sell position.
We understand that the markets our systems trade in are perceived to be at the more speculative end of the investment spectrum, but rather than view this as a risk- we believe it is an opportunity.
We believe the clientele we work for are of a similar mind set.
RISK TO REWARD RATIO
Position sizing allows our trading systems to manage drawdowns / volatility on the portfolios they build. Drawdown levels can’t be guaranteed but knowing the risk parameters means our systems we design can position size the portfolio accordingly which ensures that not only will it manage volatility, but increase the probability of meeting its yearly profit objectives.
The minimum benchmark our strategies look to achieve can be varied dependent on the client we are working with. However, we are of the belief that built correctly, trading systems should aim to operate on a minimal risk to reward ratio of 1 to 1.4. Therefore, for every pound the client risks in their portfolio, the systems aim to accrue one pound and forty pence.
Although our systems cannot guarantee returns, they do attempt as a minimum to structure portfolios with these profit objectives in mind.
So, if an Asset Manager looks for his/her clients to be operating with a 20% drawdown on their accounts, our system will position size the portfolio aiming to accrue a return of 28%. If they are comfortable operating in a 35% drawdown level, our system will be aiming to accrue a 49% return.
Although returns like this are hard to achieve, our systems will position size the portfolio with that intention, which will result in a higher risk strategy.
We are very flexible in regards to fee's and how we are remunerated, and can offer our services on a 'retained agreement', a 'contracted period', a 'one off payment' or even via a 'profit share' with your company.
The most important variable for the The Portfolio Consultancy is creating a model that works for your company, and ultimately- for the clientele you represent.
LIVE PORTFOLIO ACCESS
To demonstrate in real time how our strategies operate in the market place, we have built a live multi market, multi strategy portfolio for you to monitor before deciding to contract with our Consultancy.
By monitoring the portfolio in real time, we believe it will provide you with the knowledge and understanding of the type of portfolios and methodologies we can structure.