Risk Management

Managing risk is an integral part of the investment business. Our expertise at VBA is to take very calculated risks, both in the selection of individual companies and on a portfolio basis. We have in place specific controls to mitigate our investment risk.

• Our thorough research process, combined with clearly defined and proven investment criteria, as described above, allows us to lessen the risk taken on an individual stock. Of course, risk can never be eliminated. After all, we are in the business of taking risks for our clients. However, by having a clear understanding of the various risks that pertain to a particular company, we can detect early warning signs of developing problems and take appropriate action.
• Knowing when to sell is the most difficult aspect of portfolio management. Our sell discipline is twofold: a stock that has appreciated to a 6% weight of the portfolio is reduced, and, based on fundamentals, a stock is reduced or sold if earnings disappoint relative to our expectations or if the stock valuation is substantially overvalued relative to its long-term expected growth rate.
• VBA's decision-making process is very dynamic. Every month, the teams meet to reevaluate all holdings in the portfolio on the basis of its new risk/reward profile. The attractiveness of each investment is compared to all other stocks in our entire universe.
• To mitigate its liquidity risk, VBA restricts its holding of a given company to no more than 20% of the available float.