Strategic Tilting

“Direct investment is a challenge to scale. Some things are, strategic tilting is easy to scale, but some things aren't”

“The budget for tilting at the moment is about two and a half percent active risk at the fund level, within a total active risk budget of four percent.”

“So you can increase breadth, but I think you reduce confidence, and so we probably don't improve the performance of that by doing that. I think that's the key, is to have breadth of non, hopefully uncorrelated positions, but without destroying the confidence b…”

“So we haven't gone down below to sector or individual securities because we're more confident at the whole of market level of being able to say, what do we think the long run equilibrium prices or value is? And then compare that to the current price. When you …”

“That's got global equities, global bonds, Currency. It's got some credit. So it's sovereign and credit. We've just recently introduced a small bit of risk in commodities. So we're starting to tilt those as well.”

“The thing about strategic tilting is that you can be for a long time underwater, and because you're waiting for these markets to mean revert, and they might be slow, or they might move further away from whatever you think the mean is, and so that one we though…”

“Strategic tilting is entirely managed through derivatives. It benefits from the liquidity management that our portfolio completion team runs and the counterparty risk that we represent as a fund as a whole.”

“Strategic tilting, biggest chunk of active risk in the fund. We do that ourselves.”