Investments Archives | Entasis Asset Management

Market Pullbacks – React with Discipline

Summary

How should investors think about their portfolios in the context of a big daily market move?

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.

Summary

We will always have active and passive strategies in client portfolios. However, the percentage allocated to any investment type will vary over time.
We believe we may have entered a transition period where the environment is becoming more favorable for active managers to outperform their passive counterparts.
The most common, value-destroying behavior we witness on a regular basis is “recency bias.” This refers to the belief that whatever happened in the recent past will continue in the future.
Investing in active managers is not simply a contrarian exercise and cannot can be determined solely by a review of charts.
In summary, be mindful of cycles – they’re everywhere! Don’t chase performance, be patient, invest for the long-term, stick to the process and know your investments.

Summary

Entasis Asset Management is an investment firm founded by investors. All founding partners have earned the right to use the Chartered Financial Analyst (CFA) designation.
We believe conducting investment research in house is a significant differentiator and the article provides support for that viewpoint.
Additionally, we believe that the individuals managing portfolios should also be the individuals conducting detailed “boots on the ground” research on individual investments.
Research takes experience, a monetary investment and patience. Unfortunately, many firms do not have the ability or inclination to make research a central part of their offering to clients.