Philosophy
What we believe.
For us, financial markets are neither fully efficient nor clearly inefficient. We believe that, due to these market inefficiencies, risk premiums can be targeted and identified through sophisticated investment strategies – given the opportunity-risk ratio is consistent with our risk predisposition.
To prosper from market inefficiencies and subsequent risk premiums in a sustainable manner is not easy. It requires a disciplined approach and detailed analysis to ensure the correct strategy is selected. Furthermore, the strategy implementation requires employees with the right set of competencies and skills. Thus the focus of Pinechip Capital is on the intensive use of diversified investment strategies, both traditional and alternative. We combine these in carefully selected and varied strategy portfolios – one comprehensive market portfolio and further subordinate portfolios.
Don’t strive to outperform markets, rather allow them to underperform.
We aim to generate stable returns during all market phases, having given due consideration to the potential risk, rather than focusing on outperforming market indices. The quality of a portfolio is revealed particularly during periods of severe downturn in capital markets when risks materialize throughout various segments and regions.
Risks can kill you. Expected returns are the reward for survivors.
Focusing on achieving returns on highly risky assets, especially in favourable market periods, is not complete proof of investment expertise. In contrast, successfully generating continuous stable returns with manageable risk reflects attractively. As a result, we favour a portfolio with a balanced risk return rather than portfolios with variable fluctuations in their performance.
Markets are efficiently inefficient, definitely.
Relatively functional capital markets offer three ways to generate sustainable returns: (i) by attracting risk premiums across asset classes such as stocks and bonds (Beta); (ii) by the utilisation of commonly existing market anomalies (Alternative Beta); (iii) by exemplary individual and/or institutional skills or knowledge (Alpha). The true value of a portfolio lies in the diversification, giving independence from the most dominant risk exposures, such as the deviation of the stock markets. We believe that the success of a portfolio arises from the combination of excellent strategies and their precise implementation owing to excellent structures and processes. Portfolio construction and portfolio risk management are of crucial importance: they contribute to taking the right path and avoiding decisive errors.
Competence isn’t innate, it’s much rather the pay-off of hard work.
Successful investment requires intellectual capabilities and discipline. Slight oversight in the implementation may result in the failure to capitalize on potential opportunities. We consider it essential to continuously analyse our investment strategies and operational processes, independent of realised results. We are prepared to challenge everything, and to consider each success and failure as a learning opportunity. The feasible method of resolution for investment issues can only be found by disassembling the problem into individual components, developing solutions for each stage before then integrating these into an appropriate overall solution.