Our Take On Risk
Controlling the Controllable: While asset performance is wholly out of an investor’s control, Fort Point’s investment discipline is grounded in identifying those variables that we can optimize to increase client returns: risk, liquidity, tax efficiency and cost management. Owning a portfolio of assets that behave similarly over time (and particularly in times of stress) increases the risk of catastrophic, coordinated drawdowns.
The tradeable stock or capital stock of a business entity represents the original capital paid into or invested in the business by its owners. Stock is distinct from the property and the assets of a business which may fluctuate in quantity and value. The growth of equities correlates to the underlying growth of the business.
In contrast to global assets, these are tangible or physical assets in nature (eg. real estate, commodities, stamps, art, radio frequencies, water rights).
Yield & Rates
Securities issued by governments or corporations, which pay a fixed or variable interest rate at regular intervals and repay principal on maturity.
Investment techniques and strategies that either capture risk premia (beta) and/or obtain excess returns (alpha) with low overall correlation to the securities in which they trade (ie. equities, commodities or bonds).
Fort Point allocations consider both quantitative (number and correlation of assets) and qualitative measures (exogenous events that impact volatility). We actively monitor and rebalance asset exposures to most efficiently enhance portfolio diversification and the probability of a consistent, positive return experience.
Our Approach to Risk
Diversification isn’t enough. Volatility can either be seen as risk or as an asset. Superior portfolio returns combine diversification with options strategies to more precisely control and monetize on volatility.
Standard, seemingly-diversified portfolios can be highly correlated to the S&P 500 at precisely the wrong times. By combing broader diversification and active risk management using option overlays, portfolios can achieve superior risk-adjusted returns.
The traditional advisor approach to portfolio diversification is a blend of equities, fixed income and cash. This strategy works fine in a bull market but, without due attention to asset correlation and dynamic rebalancing, is a perfect setup for substantial, coordinated losses when the market turns.
Fort Point Portfolio
We employ an enhanced option overlay strategy to systematically reallocate in any market environment, thus offering investors the benefits of broad-based index investing with superior risk management.
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