The cornerstones of our strategy

Our strategy and investment philosophy relies on two principles:

  • Fundamentally, future market developments cannot be predicted
  • In the long term, incurred market risks are remunerated through a risk premium

Funds managed in line with our approach invest in global interest rates, currency, and equity markets. Derivatives are then used to invest in precise volumes into specific sub-segments of the capital markets. This allows to construct a portfolio that is significantly more stable than traditional assets and asset classes allow for.

The cornerstones of our strategy

Our strategy and investment philosophy relies on two principles:

  • Fundamentally, future market developments cannot be predicted
  • In the long term, incurred market risks are remunerated through a risk premium

Funds managed in line with our approach invest in global interest rates, currency, and equity markets. Derivatives are then used to invest in precise volumes into specific sub-segments of the capital markets. This allows to construct a portfolio that is significantly more stable than traditional assets and asset classes allow for.

Buying options

Buying options, in essence, means profiting from increasing market volatility. Shocks, bad news and instability increase the volatility of financial markets. TAO Alternative Investments Approach consciously takes up the positions to buy optionality and, thus, volatility.

This results in portfolio diversification that goes beyond that of traditional asset classes and instruments. Additionally, buying volatility positions has the effect of further reducing the tail risks for portfolios.

Our approach

The three asset classes – interest rates, equities and currencies – receive similarly assigned risk budgets. The next step is to identify investments within the asset classes that have a better-than-average balance between expected long-term returns and assumed risk. Unwanted risks are further reduced by consciously buying volatility positions, which is often done through buying options. The overall portfolio is a combination of positively and negatively correlated investments, calibrated accordingly by completing multiple scenario analyses. This approach results in a highly diversified portfolio with greatly reduced NAV drawdowns.

If you would like to find out more about our innovative investment approach, please contact us at any time:

Julien.petit@tao-ai.com or Anna.kravchenko@tao-ai.com

Three Special Features of our Portfolio Construction