Aiming For "Category Killers" — Insight Into This Fund's Risk Management Strategy May Surprise You

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“Don’t put all your eggs into one basket.” 

The line of advice is repeated often and for good reason. A long line of studies and university curriculums have propagated the advantages of diversifying an investment portfolio, and most fund managers in the world emulate the practice. In nearly all investment domains, it continues to be a fundamental risk management tool. 

Still, certain circumstances may arise for which an alternative – and seemingly opposite – risk management protocol may make more sense. To understand this concept, consider the soccer fan who is asked to bet on this year’s Premier League winner. It might make much more sense for this fan to pool resources into three clear title contenders than to diversify bets onto the remaining 17 teams in the league. Similarly, an investment professional with a strong conviction in a particular industry would find it much more reasonable to pool resources into two to three leaders than to diversify into weaker companies. 

At TrueMark Investments, a reportedly core component of the investment process is concentrated portfolio construction. TrueMark portfolios are specifically designed to attempt to capture the alpha – the excess market return – of a secular growth story. 

“Relying on our research process, our goal is to choose the winners and avoid the losers in each of the industries we invest in, and in doing so, potentially deliver better long-term results to our investors. Our goal is to buy and hold these best-of-breed names while limiting turnover to only the necessary levels. Essentially, this means entering or exiting a position, or the opportunistic increase or decrease of an existing position based on valuation,” TrueMark says. 

Risk Management Via Concentration?

TrueMark’s exchange-traded funds (ETF) reflect its risk management philosophy. 

TrueMark’s TrueShares Technology AI and Deep Learning ETF LRNZ, for example, seeks to capitalize on the “New Economy” asset class by investing in companies that have a shot at being a future leader in the AI, deep learning, and machine learning subsectors. The ETF contains 24 companies, each of which is a potential contender in these categories. 

Alternatively, TrueMark’s TrueShares ESG Active Opportunities ETF ECOZ seeks to provide total return by actively managing a portfolio of large U.S. companies with attractive investment profiles that meet proprietary environmental, social, and governance (ESG) standards. Within their standards the fund maintains a particular emphasis on carbon footprint. All of the constituents are potential industry leaders for the criteria. 

For more on the funds discussed, visit TrueMark’s website.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.