Proprietary Investment Strategies
Numa offers each client proprietary investment strategies tailored to that client's particular cash flow requirements, returns and risk profile, risk preference and risk awareness. We have a unique way of analyzing and addressing a particular client's attitudes toward downside risk and loss aversion. Numa constructs tailor made portfolios in managed accounts to address these concerns and guarantee with 99% accuracy that negative returns will not occur in the portfolio within an established minimum and an established return range for this minimum, no matter what market conditions exists. As an example during the 2008 crisis our moderate portfolios returned on average a positive 2.8% for the year in US equities while the market was down close to 40%. This portfolio still managed to return above 10% annualized return for the period 2004 - 2009, with no leverage employed.
These strategies maintain four main principles:
- Daily Liquidity
- Full Position Transparency (done in clients own named accounts at Private Banks in global financial institutions), all positions are available to the clients through the Internet at any given moment through banks account internet access.
- Custodied in major banking institutions such as (Credit Suisse,Clariden Leu, Deutsche Bank, HSBC, JP Morgan, Merrill Lynch, Santander, Scotia Bank and others; shown in alphabetical order)
- Full Price Transparency (all equity hedging strategies are done with standardized options, non OTC, which makes it possible for custody banks to give clients minute by minute portfolio valuations for clients.
While traditional finance with its cornerstones of mean-variance analysis, efficient market hypothesis and derivative pricing has provided relatively good models, with some draw backs to understand the market, it is not apprpriate to understanding clients risk aversion and constructing portfolios under these guidelines. On the other hand, traditinal finance has focused on a simplified notion of risk - the variance or volatility of returns - that is neither appropriate for most private investors nor leads to rational decisions when applied to modern assets like hedge funds or structured products. Hence in order to provide the best service quality to our clients we have developed simple to understand proprietary investment strategies that are hedged against donwside equity movements.
The following is a brief discription of our strategies.
Based on select industry indexes. Constructed with obligations to purchase a select number of stock, which compose a specified index, at lower prices than than the current market. In return for this risk the portfolio receives a specified income and simultaneously purchases protection against downside moves on the market index to offset the risk of any market corrections at a specified cost. This strategy tends to be very conservative based on the purchasing a considerble amount of downside protection and tends to behave as short dated bond portfolio with extremely low volatility but higher returns than short dated bonds. Return potential of Libor + 3.5% average return with no leverage.
Numa designs a customized portfolio of selected stocks in which the quantatity range between 200-300 based on a proprietary model selection of the current economic environment. Constructed with obligations to purchase these selected stocks, which compose the portfolio, at lower prices than than the current market. In return for this risk the portfolio receives a specified income and simultaneously purchases protection against downside moves on a general market index to offset the risk of any market corrections at a specified cost. This strategy tends to be conservative based on the purchasing of downside protection and tends to behave as long dated bond portfolio with low volatility. Tends to have one third the risk of a traditional diversified large capitalization stock portfolio with returns that approximate Libor + 6.0% on average with no leverage.
Based on a well diversified portfolio of stocks between 80-120 selected by a proprietary model, constructed with obligations to purchase these stock at lower price than than the market by which the portfolio receives premium income. This portfolio does not buy any protection. This strategy tends to be moderate to aggressive depending on the level established by the risk tolerace to buy the underlying stocks in the portfolio. Tends to have half the risk of a traditional diversified large capitalization stock portfolio. Libor + 8.0% average return with no leverage.
Based on portfolios of Numa Defender and/or Numa Shelter which simultaneously buys a directional play on the upside of stocks. Portfolio whose objective is to obtain 25-30% returns when markets go up slightly (3-7%). It has an implicit protection of 5%-15% but cannot protect the portfolio of further down falls in the market.
Numa ECM (Effective Counter Measure)
A variation of Numa Brigadier but with the sole purpose to recoup losses in a portfolio on long only equity positions, it serves as a measure to increase the probabilities of recouping losses while at the same time protecting the existing position against a 10-15% further fall in thestock positions. These strategy is usually applied to portfolios that have been transferred from other managers who have had significant losses and clients wishes to recoup those losses with some sort of protection against further market falls. To a lesser extent it has also been used for fallen angels on individual stocks that have been placed in the portfolio.
A variation of Numa Defender where the instead of buying the protection on the general index the portfolios buys a selected number of protection on a selected stocks that Numa believes will behave poorly based on proprietary research and third party highly named providers. These portfolios tends to behave extremely well in down markets and relative stable returns in up markets. Libor + 10% average with no leverage..