Risk Management RISK MANAGEMENT Managing Risk plays a major role in the accumulation and retention of wealth. As investors, each of us wants to make all the money we reasonably can but stretching too far or chasing yesterday’s winners may not produce the desired results. In today’s markets, an adaptable process can be vital, for circumstances change, and an investment manager must always be thinking about the effect of those changes on portfolio strategy.Verity’s investing principles and practices for portfolio management have evolved over time, shaped by insights gained over many market cycles and conditions. Our team of portfolio managers run a broad range of strategies, using differing styles of management. There are thus variations in the specific approach to the management of risk, but there are several themes common to most: Fundamentals – Price is always a primary consideration. A key question is whether the security in question be purchased at a price which offers not only a sound prospect for growth but at the same time more limited downside risk? Correlations – The primary purpose of effective diversification is to reduce the correlation among positions in a portfolio; to reduce risk, one typically does not want everything moving in concert. As a consequence, we pay attention to correlations not only during portfolio construction, but also are attentive to changing correlation patterns that may develop over time. Overall Market Dynamics – With information flows accelerating, conditions in 21st century markets can change quickly. While it does not usually pay to be reactive, experienced managers can often discern from changing trends, patterns and market interactions developing risk conditions they may seek to mitigate in a variety of ways. Most approaches to personal investing begin with a focus on the manner in which assets are allocated among different securities or strategies The risk mitigation strategies used by portfolio managers are important, but equally important in constructing each individual portfolio is understanding an investor’s tolerance for downside market movements. The Verity process is built with a goal of matching an investor’s tolerance for downside movements to their portfolio’s structure and composition. Do you know your tolerance for risk? CLICK HERE TO DETERMINE YOUR RISK NUMBER