How does IMI manage risk?
A. All active investment managers, whether quantitative, fundamental or qualitative, make bets. They further assume that company characteristics that they prefer will be favored and rewarded by the market. This is how active investment managers hope to earn returns in excess of their benchmark excess return. Our strategy is no exception to this fundamental rule of active investing. Among other attributes, we favor companies that have demonstrated fundamental stability. Traditional risk management and portfolio construction platforms are designed to reduce bets that they do not understand. In the process they end up curtailing the exact bets the manager is attempting to make. Since these bets are the source of excess returns, they end up constraining or eliminating the managers ability to earn excess return. We believe we have a better method of controlling the risk of our investment process: one that does not make us sacrifice our ability to earn excess return in exchange for risk cont
