The absolute level of exposure and the composition of the fund is determined by the availability and attractiveness of specific investments in our broad mandate. The UCITS III regulatory framework applies to the fund, which ensures a good diversification. As a typical case, the important parameters in the portfolio build-up are the following:

• 30-40 core global security positions, primarily equities
• No net leverage (net exposure not exceeding 100 percent)
• Gross exposure cannot exceed 200 percent
• Limited use of short positions to distil desired portfolio exposure

Through our company research we may invest in other parts of the capital structure than the equity of a company, such as high-yield bonds, when such investments are attractive from risk-adjusted reward perspective. Similarly, it is natural in our research to come across clearly faulty business models in combination with high valuations and identifiable reasons for deflating market expectations. In those cases we can establish a short position to take advantage of such negative return situations, although this will be rare. More frequently, we use other instruments to hedge out unwanted risk/exposures from our long global securities. This could for instance include shorting a closely related index or shorting one of the company’s publicly traded subsidiaries if we are long the holding company of the conglomerate; or even possibly shorting the shares of one of its competitors. The range of the hedge can be anywhere from 0 to 100 percent of the value of the global securities portfolio but it is not possible for the fund to have a negative nominal exposure, i.e. establish a hedge that exceeds the long exposure of the portfolio. Typically, we expect to have a net long exposure of 70-75%.

At times, risk adjusted return opportunities present themselves in unlisted securities or equivalents. Our mandate allows us to pursue such investments. As a typical case, these special situations will constitute a few percentage points, if at all, of the portfolio.

The typical portfolio position weight is between 1 - 5 percent of the portfolio. If the risk adjusted investment conviction is very high, a position can have up to a 10 percent weight in the portfolio, which is the maximum according to UCITS III regulatory framework.