Investing
Objectives and Core Values
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Preservation of capital within the scope of defined risk taking readiness (volatility and time horizon) |
| • | Capital appreciation in good times |
| • | Protection against uncontrolled losses |
| • | View on liquidity and cash flow needs |
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Use of transparent, liquid and cost efficient investment products |
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Active asset allocation, investment themes and selection of custodian banks |
Asset Management Process
Step 1
Based on independent research 3-4 possible macro economic scenarios are developed and enhanced with probabilities of occurrence over time.
Step 2
A sophisticated data model calculates the degree of investment opportunities of various stock indices (sectors/geography) and currencies. This model reveals without any emotional context, which markets are attractive or expensive and where opportunities exceed risks.
Step 3
The findings of the 2 approaches are combined leading to the “strategic asset allocation”. Under normal market circumstances this asset allocation remains valid for one quarter. However, material developments in the investment environment trigger a review and possible changes. Decisive remains always the choice of the various asset classes and currencies. We distinguish between 6 different portfolios for “normal” investors and another 2 for investors with a longer-term investment horizon.
Step 4
Cottonfield aims at reducing volatility and to limit potential losses actively and early on during times of crisis. This is not done in the sense of an “absolute return” objective but rather with reference to clear risk limitations. For this purpose, investments are used that incorporate a degree of loss protection mechanism. Additional investments cover themes, trends and regions and pursue shorter-term opportunities. The selection of suitable products is important. They all must meet our requirements (transparency, cost, trading liquidity, low counterparty risk, etc.). Our due diligence process is extensive and done with utmost care. As important as the selection is the monitoring of investments executed. Our use of clearly defined, dynamic “triggers” and staying in close contact with managers help us to recognize adverse developments earl
Step 5
The implementation of new mandates is carried out in steps and with cost consciousness. The adherence to internal guidelines and investment restrictions defined by our clients set the standard for our asset management. Our investment perspective is mostly long-term leading to a low portfolio turnover. It is the fund managers chosen who are active and adapt the portfolio. Apart from choosing the best investments, foreign exchange rates influence the performance. We use “overlays” (hedging on the level of the portfolio) or focus our activities on the base currency of an investor. Furthermore, we make sure that we identify the currency exposures of each investment product. In recent years, often enough good investment performances were reduced / eliminated by currency movements.
Investment Product
Cottonfield has no conflicts of interest when selecting an investment product and we adhere to strict and consistent selection criteria.
The core of our investment philosophy (capital protection from uncontrolled losses) cannot pursued with third party products, only. Therefore, in collaboration with our parent Aquila & Co. AG, Cottonfield has developed and is offering a small family of investment funds, that
– protect the invested capital during extreme markets
– and still participates in favorable market developments
– can be deployed in modules
– while still remaining cost efficient
Index Tracker with partial protection and with focus on 3 main markets (SMI in CHF, EUROSTOXX50 in EUR, S&P500 in USD)
Portfolio funds (Swiss BVV2 [Pension Funds] compliant) with
partially protected exposures to stocks (APENSO 25 and 40)
Global Equity Value Funds based on single stock selection, different investment
degrees and hedging overlays(in CHF and EUR)
Asia Opportunity Trend Optimizer
Long-term participation in the Asian development story with built in mechanism to avoid material losses (in EUR and USD)