Investment Methodology
- Fundamental analysis of political events, economic relationships and financial market expectations likely to influence the currency markets
- Development of trade ideas in consideration of forecasts and market dynamics
- Build a portfolio of trade ideas using strategies compatible with expected market conditions, including ranging, trending, converging and reversing
- Arbitrage
- Relative Value
- Volatility
- Directional
- Develop these ideas in consideration of varying portfolio parameters and pre-established risk limits
- Actively manage positions and specific accounts in accordance with risk guidelines and changing currency market conditions
- Liquidate or neutralize positions if account risk or market risk approaches limits
- see Trading Approach
Hathersage's investment objective is to achieve consistent appreciation of assets over a long-term investment horizon, while preserving invested capital through limited drawdowns.
Strategies
Hathersage employs trading strategies which embody arbitrage, changes in volatility and relative value, but most trades are directional in nature. These strategies are used to express trade ideas based upon a fundamental analysis of economic relationships, political events and financial market expectations.
Markets
Hathersage executes trades solely in the twenty-four hour spot and forward interbank markets. Generally, only the world's most liquid currencies, such as the euro, the Japanese yen, the Swiss franc, the British pound, the Canadian dollar and the Australian dollar are traded. However, from time to time less liquid currencies, such as the New Zealand dollar, the Swedish Krone and the Norwegian Krone may be traded. Many of Hathersage's strategies include the use of options which are also traded in the over-the-counter market.
The considerable network of international contacts in the interbank foreign exchange market that has been developed and maintained by Bill Lipschutz and his team is one of the elements that distinguish Hathersage from other trading advisors. Hathersage’s access to accurate and immediate information assists in its interpretation of economic and political influences on financial markets. It is these interpretations that form the basis for Hathersage’s trade ideas.
Risk exposure
As success depends largely on Hathersage's ability to anticipate market movements and optimize returns while minimizing risk, trade ideas are expressed by utilizing strategies which produce return patterns yielding a high probability of profit for various outcomes given levels of risk predetermined to be acceptable. Risk exposure is structured and maintained within acceptable tolerances through the use of options and the continuous real time management of portfolio positions. Careful attention is paid to leverage multiples, risk/reward asymmetry, and average time-weighted exposure to event risk.
Time Horizon
Investment time horizons for trade ideas vary from less than twenty-four hours to six months, depending on the trade idea itself, the stage progression of the strategy employed and the parameters of the particular portfolio for which the trade is being executed.
