Risk Management

Risk management is not a discreet step in the investment process but is integral throughout the process. The key elements to risk management at Level 3 are:

  • Investments are assessed on a long-term fundamentally driven value basis that is conservative in its forecasting and valuation. A low security purchase price relative to estimated value can enhance return potential but more importantly mitigate potential losses.
  • The Fund is managed on an integrated basis meaning the risks associated with securities are considered separately as well as their impact on the overall risk of the portfolio. Securities are selected based on comparisons made across the portfolio rather than only within distinct stock or bond silos. 
  • Macro-economic analysis and cyclical factors are considered for risk management purposes and avoidance of excessive exposure to systematic risk.
  • The Fund does not engage in short selling and does not employ leverage. The Fund may engage in hedging strategies in order to hedge against certain commodity, interest rate, currency or other risks inherent in the Fund’s positions.
  • Real diversification is sought so the Fund is not overly exposed to one industry sector, theme, macro economic variable or investment premise. Unexpected events occur and expected events fail to show up on schedule if ever.
  • It is important to recognize that investing is a probabilistic exercise and requires a sell discipline. This is as important as the discipline applied to the purchase decision.