Azimuth has developed a number of proprietary risk management tools. Fundamental to our approach is the recognition that traditional risk measures significantly underestimate the risks associated with hedge fund investments. Hence, our proprietary FaTCat framework analyzes hedge fund risks during both normal and stress periods.
The Azimuth Investment Team measures and monitors a wide variety of market related and fund specific risks and also recommends appropriate risk exposure ranges. The managers of the funds we invest in are required to disclose their risk exposures along a number of dimensions. Many of these exposures correspond to traded financial instruments which can be employed in portfolio overlays to rebalance risk.
Azimuth also systematically uses a number of other tools to rebalance its portfolio in an effort to enhance return. Our risk management process allows us to aggregate, monitor, and balance several risk exposures including worst expected quarterly loss in each fund and in the entire portfolio.