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Relative Value Analysis – The Anatomy of an Investment Decision

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Summary

  • We have increased the amount of emerging markets exposure we have allocated within client equity allocations.
  • We do not vary portfolio weights much from the broad equity and fixed income asset allocation targets we agree to in the investment policy statement we establish with clients. Instead, we vary underlying “sub-asset class targets” in portfolios based on the outcomes of our research and relative value analysis.
  • Our relative value analysis is a means of comparing the characteristics of a sub-asset class grouping to its own history, to other sub-asset class groupings and to forward expectations to determine if it is attractively valued.
  • Our opinion on emerging markets is based on a mosaic of economic, currency and growth fundamentals, as well as valuation levels and examination of historical performance cycles.
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