Friday, 15th December, 2017

Risk Management

At Avem Capital, we engage in both human and technological insight into the management of risk. The measures we adopt to reduce unnecessary risk include onsite managerial reviews and the use of a proprietary system that monitors, manages and actively reduces risk exposures in the portfolio, from trading platforms to selection of businesses for investment. Combined, these measures assist and manage Avem Capital’s traders and fund managers in anticipating changes in our varied portfolio’s risk exposures and mitigating their possible effects to all funds.

A comprehensive approach to risk management

  1. Complementary investment strategies limit exposure to a single trading approach and offer the opportunity for broader gains.
  2. Experienced investment managers with deep expertise in their area of specialism.
  3. Automated risk management provides current and historical analysis of risk and trading transactions, along with up to 1000 samples per second of essential unique market data.  Our automated alerts inform Investment Managers and Risk Managers if specified parameters are at risk of breach, whilst our loss limit systems intervene if a strategy is at risk of significant losses.
  4. Dedicated risk management expertise helps ensure that Traders & Investment Managers are operating within their risk parameters and making prudent investment choices when balancing risk and reward.
  5. Automated Investment Manager support provides instant feedback on trading decisions and advice on reducing risk in the future.  Automation of routine tasks reduces human error and frees up our Investment Managers to focus on the important task of analysing investment opportunities.
  6. Failure and emergency risk mitigation acts immediately in the event of a sudden or impending system failure.  A completely independent offsite server acts to shroud trades and alert all relevant staff to act.

Human Capital in Risk Management

Despite successful advances in technology and continued investment into our own proprietary risk management system, we believe that the human element of risk remains a critical part of our funds, whether it is trading or business investment based. Our Chief Risk Officer works alongside all Fund Managers to ensure a suitable level of risk is maintained throughout all funds in our portfolio. This role is supported by additional specialist Risk Managers for each fund, such as our highly experienced FX Risk Manager who works alongside the Foreign Exchange Focus Fund trading team. We also offer trading staff and Fund Managers access to our Performance Coach who is charged solely with assisting them in managing the pressure of environments they specialise in. Our Performance Coach helps to develop strategies for enhancing performance under stressful conditions. Our staff are continually monitored for pressure, trends and personal issues. Our risk servers monitor all funds individually, along with our entire portfolio (introduced in detail below), as does our Risk Management team. We are not afraid to temporarily remove traders or Fund Managers from certain strategies, or completely if we believe their ability to perform to our requirements may be impacted. Successful risk management relies not only on being managed in the moment but as a continual process to increase performance. As part of Avem’s internal risk management procedure, we conduct a formal review process at the end of each trading week. This review is a crucial element of how we monitor and manage portfolio performance, trading strategy and the decisions of every individual dealing with any of our funds. With every single trade executed being logged, together with the strategy used, market conditions and a chart snapshot, we can provide a comprehensive data output for the Management Team to review. Fund managers’ research and business and investment modelling are recorded and closely analysed by type, sector, historical data as well as with the overall exposure. The result is the Management Team being perfectly placed to make informed decisions for continued growth and improvement.
Key Data:
  • Onsite Risk Manager and Performance Coach
  • Proprietary risk management system
  • Trade-by-trade risk oversight
Learn more about our risk management practices here

Maximum drawdown

As one of our Clients, you have the power to reserve the right to specify a maximum acceptable account drawdown. This limit acts to reduce exposure to currency markets by enforcing a maximum loss potential on all open trades. The risk parameter may be defined as a percentage of total assets. We offer a discretionary choice between zero (0%) and 25% of the account’s net asset value. The 25% risk parameter corresponds to the highest risk appetite that we offer. At a risk parameter of 25%, all open trades will be closedshould an account lose 25% of its starting value.