At Zentrum, we view risk management not as a separate discipline but as part of our culture, which is reflected in our investment process. Our investment manager invests within stringent risk limits which ensure our portfolio is transparent, diversified and liquid.

Risk Management is a critical function that influences allocation decisions, portfolio construction and sizing. Most importantly we need to ensure the risk being taken is generating sufficient return for the portfolio. A balance of risk and reward is key to investing as well as to risk management.
We apply derivatives management techniques to our portfolio risk management. The amount of risk that we are willing to accept in our portfolio is proportional to how much return we are generating during the year. i.e. when our portfolio is making money during the year we tend to take more risks and vice versa when the portfolio is losing money. This way we can ensure that we protect our capital when the market is going against us. We will not try to fight the market but simply ride with market trends.

Zentrum applies the following approaches to risk management:
  • Perform risk analysis independently from the investment managers
  • Undertake scenario analysis and stress test the portfolio
  • Ensure the markets that we invest in are transparent and liquid

At Zentrum, we ensure that we are nimble and flexible enough to get in and out of the markets. We tend to hold a significant proportion of cash in our portfolio to take advantage of any market opportunities.

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