Risk Management

Modern Portfolio Theory (MPT) teaches that a well-constructed portfolio is one that maximizes return for a given level of risk. This tenet is at the core of AJF’s risk management process and is the reason why we implement a well-designed asset allocation model to reach clients’ goals.

Under normal economic conditions, a particular asset class should exhibit a low correlation with other asset classes. Further,certain asset classes tend to perform differently during the varied stages of the global economic cycle. A risk managed portfolio is one that keeps the global economy in mind to diversify across asset classes to achieve a desired result. Our proprietary asset weightings are developed using forward-looking assumptions that take into account not only where the economy currently is, but also where it is headed. Our strategy is further bolstered on the security level where our ESG overlay provides an additional layer of due diligence to identify companies of the highest quality with the least contribution to systemic risk factors.

The result is a portfolio that provides investment returns commensurate with a given risk tolerance while minimizing volatility and downside capture over a long-term time horizon.