The desire to preserve capital is the new reality in investing. However, all asset classes, even those considered safe, hold some degree of risk and are subject to bear markets.
The Four Quadrants portfolio applies a greater degree of sophistication than conventional asset-allocation funds, incorporating three layers of risk control:
1. Volatility control. We control day-to-day volatility in the strategic planning of the portfolio through volatility targeting and economic diversification.
2. Tail risk management. We estimate and balance for large but infrequent events across all portfolio holdings.
3. Tactical allocation. We actively manage fund holdings in response to evolving economic conditions, for the specific purpose of protecting against major drawdowns.
As a result of our risk management practices, investors should experience improved short- and long-term performance, safety and reliability relative to traditional approaches. This implies less exposure due to the timing of entering or exiting the fund.