Introduction

Taking a break from the Kingsmen series, I decided to pen down my thoughts on portfolio construction and management, which is a topic which investment bloggers seldom (if ever) write about. During my time in the investment industry, I have had the privilege of speaking with (and some may say “interviewing”) many hedge funds in order to ascertain if they are worthy of investment into, and I have met many CIOs, CEOs and also Investor Relations personnel while doing due diligence on these Funds. Some of the questions would invariably revolve around the construction of their portfolio, the characteristics of it, how they measure performance and how they monitor positions for risk and valuations, amongst others. In case the reader is wondering, portfolio construction and position sizing is actually of great importance in determining overall returns, and most investors would prefer to concentrate on what to buy/sell rather than …