Focus on risk, not return
Posted by Robin Powell on September 25, 2017
My colleagues and I are working with some really exciting companies at the moment — firms at the forefront of positive change in the global investing industry.
One of them is Scalable Capital, Europe’s fastest growing digital wealth manager.
There are several reasons why I think Scalable has a very bright future. For a start, it’s attracted a shedload of investment, not least from BlackRock. It’s also Europe-wide; though most of its current clients are in UK and Germany, it’s now expanding into Italy, Holland, and Switzerland.
As you’d expect from a firm with an evidence-based investment philosophy, it’s also low cost.
But the most interesting aspect of Scalable’s offer for me is its approach to risk. As Benjamin Graham once said, “the essence of investment management is the management of risks, not the management of returns.” Scalable certainly takes risk management very seriously, continuously monitoring how much risk their clients are exposed to, using cutting-edge technology.
“Instead of using static weights for different asset classes to approximate a certain degree of risk,” the Scalable website explains, “we measure risk itself and adopt a fluid approach to asset class weights to ensure your portfolio truly reflects your desired risk exposure.”
In this video, I ask Simon Miller, one of Scalable’s co-founder’s to explain what that means in practice, and why, in his view, it should lead to better client outcomes: