Our investment method combines the aim for capital preservation with the potential for capital enhancement. We invest in fixed income securities for their wealth preservation and stabilization effect and add equities to achieve real long term capital appreciation. The allocation to the respective asset classes varies with their absolute and relative valuation as well as our fundamental outlook.
In order to merit their function as stabilizers, bonds are selected from high quality issuers only with mostly short- to medium term maturities. At times we might add foreign currency bonds as to profit from a positive yield difference. With equities we aim to add value by selectively picking companies, which we consider undervalued based on our own valuation metrics. We typically invest in top quality, highly liquid companies at attractive entry points using the volatility of their individual business cycles to our advantage.
Whereas in the real world businesses are cyclical, markets tend to predict a linear outcome, which often leads to mispriced situations resulting in attractive buying opportunities.
While we prefer direct investments, both in bonds and equities, in certain cases specialized mutual funds or ETFs might be more appropriate.
Occasionally, other asset classes like gold, commodities and currencies might be included for return optimization and diversification purposes.