CLS uses a proprietary risk calculation to measure the risk of each asset within the portfolio to ensure the combined risk level of the portfolio is suitable for the investor’s individual needs. The measure takes into account the asset’s relative volatility (“standard deviation”), its relative movement to the market (“beta”), its behavior during months with negative stock market performance (“downside market capture”), and the amount of time the asset would take to be bought or traded (“liquidity risk”). We are careful to not underexpose the portfolio to risk, as this may not give it adequate opportunity to grow. Yet we do not overexpose it, as this could leave the investor unable to meet his or her financial obligations.
CLS’s unique and consistent risk management process is critical in helping investors reach their long-term investment objectives. It is designed to provide stability to the portfolio and peace of mind that investments are being maintained at the level of risk the investor is comfortable with, regardless of what is happening in the market. In addition, through global diversification among over 100 asset class segments and strategies, CLS seeks to minimize portfolio volatility while pursuing areas of opportunity in the market, all within the constraints of the investor’s Risk Budget.