AlphaPoint Investment Management Investment Philosophy

A core principle of our philosophy is that client trust must be earned each and every day. To actualize this requires working with clients to set risk and return expectations of their portfolios. If this is done properly, investors will understand how their portfolio returns may respond to different market outcomes. The objective is to earn the highest return consistent with the client’s tolerance for declines in portfolio value.

The challenge to achieving this objective is two-fold. The first is acquiring a clear understanding of how much risk a client can really tolerate in seeking their desired return. The second is constructing a portfolio that minimizes risk relative to an achievable return objective. This requires sufficient profiling to acquire a keen understanding of the client’s financial and emotional tolerance for risk. It also requires expertise in risk analysis and risk management.

At AlphaPoint Investment Management our first priority is to identify the nature and quantity of risk unique to each investment we consider, and to evaluate whether its purchase adds to or reduces total portfolio risk. If this analysis indicates risk within tolerance, we proceed to analyze return potential. If we are effective in executing this process, clients will be more likely to stay the course during difficult times and their returns should be consistent with expectations regardless of market conditions.

Within the context of setting expectations for clients our philosophy holds that:

• Effective management requires the evaluation of as many potential market outcomes as possible even though we may assess vastly different probabilities to each of the outcomes. This broadens our awareness of the possibilities. We hope to avoid being blinded by our own version of the state of the market.

• We believe in sell disciplines as part of risk management. Mistakes must be admitted, and recouping a loss in a stock by continuing to own it must be evaluated relative to other opportunities.

• While the market frequently overreacts in periods of volatility it is, in general, effective in pricing current conditions and tends to be forward looking. Therefore, we must always evaluate ideas, events and trends to determine to what extent they are priced in or accounted for in current price.

• We do not believe in a trading discipline or market analysis for all seasons. There is no market or trading strategy that will yield consistently better than market results. This is because the drivers of the market change. We strive to determine what the prevailing drivers are and judge the longevity. The result of this, is that the inputs to our stock selection process and their weight in calculating fair value changes over time.

REGARDLESS OF THE INVESTMENT PHILOSOPHY, ALL INVESTMENTS INVOLVE RISK AND COULD LOSE MONEY. MOST NON-U.S. INVESTMENTS ARE SUBJECT TO MORE RISKS THAN U.S. INVESTMENTS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
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