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The Investment Philosophy

Pillar of Financial Consulting and Money Management

The advisory services provided by FINARC are based on innovation and discipline.   There is no single investment selection process better than another.   Ever evolving fiscal and monetary policies, and global influences, do provide excellent growth opportunities in the financial markets.   However, in a rapidly evolving global financial market, it is crucial to be able to mitigate risk, to promptly identify and evaluate the wide variety of investment opportunities available in order to achieve investment objectives.

FINARC's unique investment style combines the best analytical methods and takes advantage of all available investment vehicles to create one effective investment process and to maximise performance within the regulatory and operating constraints of each client.

Strategic Advice and Top-down Approach

Paramount to FINARC's advisory process is the fundamental economic analysis, that is analysing broad economic growth trends and to select one of the three possible scenarios:  recessionary,  non-inflationary or rapid growth.   Then, direct attention goes to targeted business sectors, by concentrating exposures within sectors possessing the greatest earnings potential, given current and anticipated economic environment.   Sectors confronting regulatory uncertainty, labor concerns, pricing pressures, technological uncertainty or diminishing growth prospects will be duly avoided.   At this stage in the process, FINARC uses a model that allows for the flexible expression of views, both in absolute and relative terms and with different confidence intervals.

Tactical Consulting and Bottom-up Approach

Security analysis and security selection are the pillars of tactical consulting.   Recommended mid to large cap companies, within targeted sectors, are reviewed by using a multiple steps bottom-up analysis.   FINARC selects quality companies operating, among a large universe of over 3000 companies listed in 20 different international financial markets, and within the leading business sectors whose target prices imply an attractive capital appreciation potential.   Particular attention is devoted to establishing and reviewing price targets, as well as their stress levels.   The selected investment vehicles and the implemented operating strategies are based on expected catalysts, able to enhance the expected investment potential.

Technical and Quantitative Approach

The quantitative and technical investment analysis tools are extremely efficient to refine investment decisions, as well as entry and exit points, to further enhance performance.

Global investment reach

Global exposure is superior to local alone, because international markets provide a broader range of investment opportunities.   Therefore, FINARC's seasoned investment professionals stay on top of market developments around the world in an effort to ensure that recommended investment strategies best serve clients' objectives at any point in time.

Strategy monitoring and risk management

Once a properly structured asset allocation is established, the art of investing turns out to be the skill at managing risk.   To achieve superior and sustained investment results and make appropriate, yet prudent, investment decisions, there are two areas of ongoing concern:

  • One is to continually estimate the impact of changes in market fundamentals on expected capital-market returns.
  • The second is to identify those opportunities where market pressures or human psychology have created a price bias.

The foundation of FINARC's risk management structure is a series of proprietary decision-making tools that help determine asset allocation guidelines.  These tools work with such basic factors as analysts' earnings expectations, equity and fixed-income market valuation, and liquidity analysis.   However, FINARC attributes major importance to monitoring its own track record of investment consulting expertise, based on performance analysis and attribution, in order to single out the exact source of extra performance that may stem from strategic consulting, stock selection, and intra-day timing.

The purpose of each-decision making tool is to help FINARC's key professionals form a view on each asset class, to dynamically manage its weight within every client portfolio, in order to generate a return above and beyond that of a "buy and hold" strategy.   Risk management discipline is of a maximum importance.   It is, therefore, reviewed dynamically, both ex-ante and ex-post.   Particular attention is given to the control of investment return volatility, for the purpose of maintaining it within pre-established limits.