Symphony Capital Partners believes that the most robust portfolios are created by combining multiple uncorrelated return streams, each one designed to profit from a fundamental, logical return driver.
A different approach to diversification:
The vast majority of investment products aim, and often fail, to achieve true diversification by either seeking "optimal" returns or by diversifying amongst asset classes, often in combination. We believe this approach is fundamentally flawed, as it is inherently backward-looking and hence diversification is often found wanting when it's most required (i.e. when asset classes become highly correlated such as in 2008).
Our experience tells us that a more successful portfolio can be built by identifying multiple uncorrelated return streams that work best as a combination and are likely to behave differently in most scenarios, especially in periods of market stress. Whilst each individual return stream may be perceived to be individually "unattractive" as a stand-alone investment, when correctly blended they can combine to create a truly diversified portfolio. Portfolios constructed in this fashion will be able to weather most market environments so that no single economic or political event can adversely affect the portfolio. Rather than attempting to find individual superstars, the process is more like building the best team.
These strategies are then rigorously tested and applied across over 100 liquid, exchange-traded markets spanning all asset classes, resulting in more than 1,000 strategy-to-market combinations.