Risk Management Approach

Proactive & Reactive Risk Management

We believe risk management is a critical discipline and employ a two-pronged, disciplined approach for every investment. Early recognition and swift correction of any weak spot is key to our long-term success.

Playing Offense & Defense: The final overlay to our investment process is risk management, where we strike the balance between investor return objectives and risk tolerance. Our proactive risk management is designed to help prevent an issue from happening in the first place. Careful research, a team culture that respectfully challenges viewpoints and positioning, and documentation of every trade rationale help to minimize risks and misjudgments. However, even the most carefully researched investment can fail to perform as expected. If that happens, our reactive risk management aims to mitigate the impact of unexpected events. This disciplined, unemotional process alerts us when an asset reaches a pre-determined threshold so we can take the appropriate action given the current conditions.

Bulls & Bears Shape Better Decisions

A hallmark of RiverFront’s approach and the pinnacle of the team’s collaborative nature are our bull and bear debates that are used to evaluate underperforming investments. Before deciding to re-underwrite a security or allocation, the broader investment team organizes into two groups. One part of the team will develop and present the bull case for the position while the other part will take the bear case. In-depth discussions and lively debates help shape the portfolio manager’s ultimate decision.

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