Our investment philosophy for equities, fixed income and other asset classes is to provide our clients with diversified and risk controlled portfolios. For fixed income constituents of portfolios, we have a long-term fundamental value orientation. For the equities elements of portfolios, we apply systematic investing and seek optimal execution.
Our investment style emphasizes a team approach and use of multiple strategies while constraining the overall risk relative to the benchmark. Our team of portfolio managers and research analysts are highly skilled and experienced in the fixed income, equity and related markets. The team approach to investing in the MENA markets seeks to ensure that portfolios benefit from a consensus of decision-making that draws on the expertise and experience of all team members.
Our investment approach is to manage portfolios using a top-down investment process for asset allocation combined with a bottom-up security analysis process.
The top-down investment process is driven by considering numerous factors including proprietary sentiment indicators, macro-economic data, sector outlook and political risk assumptions. The portfolio management team also reviews the direction of growth, inflation, interest rates and stock markets on a monthly basis for purposes of allocation between asset classes.
Where permitted under the terms of the relevant mandate, the portfolio management team utilizes appropriate techniques and instruments for diversification purposes. In seeking diversification, exposure is gained to non-core asset classes such as commodities through derivative instruments.
Portfolio & Market Risk
Whilst various tools are used to evaluate risks within clients’ portfolios, we understand that quantitative techniques can never be a substitute for professional experience and sound judgment or implementation of robust controls. Our portfolio managers use professional systems and reports specifically selected having regard to the nature of products traded by MENACORP as well as the reporting needs of our clients. These reports quantify portfolio risk across a variety of factors and scenarios such as interest rates (duration and convexity), equity, currency, and credit risks. Other reports provide information on exposure (in both absolute terms and relative to the benchmark) to sectors and sub-sectors, as well as other relevant measures, for both the portfolio and the individual securities. The reports used are regularly reviewed to ensure they continue to provide the information required by our portfolio managers in the most efficient and effective manner.
Analysis of data is conducted throughout the trading day and involves a detailed review of portfolio holdings and sector concentrations. Our team also regularly performs scenario analysis and stress testing to analyze portfolio exposures to market risk factors. Tracking error is also monitored on a historical and a forward-looking basis.
Independently of the portfolio management team, performance of portfolios is reviewed by MENACORP’s Investment Committee at its monthly meetings.