Large portfolios tend to dilute strong stock picking ideas without improving the risk profile of the portfolio
WHITE PAPER - Longer is better for concentrated portfolios
Many investors define risk as the divergence of a portfolio from its benchmark. In this white paper Comgest tells us why they consider risk to be an absolute concept and define it as the chance of permanent impairment of the fundamental characteristics of a company. This affects the long-term profit growth of a company and could be the result of changes in market share, business model and competitive edge. In order to gain sufficient insight into this risk, Comgest needs to limit the number of companies they wish to have in-depth knowledge of. Their portfolios consist of a selection of these companies and as a result exhibit ‘high active shares’. In their opinion, the starting point for potential outperformance of a benchmark.
Wolfgang Fickus is a graduate of the University of Cologne (Germany) with a degree in business administration (Diplom-Kaufmann) and studied at the London Business School. He also holds a CEMS Master’s in international management and is a CFA charterholder. Wolfgang began his career in 1995 at Paribas Asset Management Paris as a European equity fund manager. In 2000, he moved to WestLB where he worked as an analyst for European technology stocks before becoming the Head of Midand Small Cap Research in 2005. Wolfgang joined Comgest in September 2012 and is a Member of the Investment Committee.