Risk Management

We invest for the long-term, so we know exactly where risk resides in our portfolios and how this matches our clients’ objectives.

Investing involves more than just understanding all the details. It also requires that you uncover the insights about how a portfolio candidate’s business is run and the dynamics of their industry. At Montrusco Bolton, we use these insights to identify clearly both a stock’s return potential and its level of risk.

 

A core principle

From the outset, we seek to fully understand a client’s risk tolerance, as it will help chart a course for security selection and portfolio construction. Risk controls are incorporated into each step of our investment process. Internal guidelines help to diversify portfolios and protect clients from undue risk. 


Risk Committee

  • We have a Risk Committee that is led by a risk manager.
  • The risk manager is responsible for the risk management process that functions independently of the direct risk takers (i.e. portfolio managers), but works in partnership with them. Specifically, he monitors parametric (i.e. VaR) and non-parametric risks as well as event risks.
  • The risk management process is ongoing:
    • Parametric statistics are calculated weekly.
    • Weekly risk reports are sent to portfolio managers if the risk manager believes that a portfolio risk profile is worrisome after assessing parametric and non-parametric statistics, as well as outlier events.

A stepping stone

At Montrusco Bolton, risk management is used to identify threats and opportunities. We use risk models to assess inherent risks in portfolios and budget for them, for example by forecasting the upside and downside potential of every investment idea. We also rely on the experience of our portfolio managers to capture non-quantifiable risks.


A way to do business

We promote a ‘healthy’ risk culture that translates into all of our managers being open, transparent and ready to take action.