The Manager believes that financial markets are generally efficient and that it is difficult to outperform general market indices through active stock selection over the long term. Instead, we believe that sustained market outperformance is best achieved through the purchase of discounted assets: assets that are trading at prices which are below their assessed intrinsic value. This approach is then coupled with an active strategy aimed at capturing the value presented by the discount.
A key feature of this strategy is that it seeks to achieve a lower realized volatility of investment returns than that of a strategy which invests solely in international equities. This lower volatility profile is a function of the underlying exposures of the investments in the portfolio, which will be a wider range of financial assets than just listed equities. The risk profile of the portfolio will benefit from this diversification across asset classes, as well as from the lower volatility exhibited by some of the non-equity assets, such as government and corporate bonds.