Understanding Portfolio Fit

Look Through the Label

Discretionary, quantitative and alternative are broad categories. Strategies within them may share direction, liquidity needs, event exposure or dependence on a common source of data. Describe these underlying drivers before discussing diversification.

Consider Changing Conditions

Relationships observed in one period may not hold in another. Explain how the strategy behaved during difficult conditions and how simultaneous losses across positions or strategies could arise.

Discuss Capacity and Interaction

Capital changes can affect execution, concentration and liquidity. Discuss how the strategy might interact with other exposures without assuming that combining strategies will reduce losses. Portfolio fit is assessed individually.