Syfe investment methodology

After seeing the “weird” portfolio allocation for Syfe I attended one of their introductory seminar to get a better understanding of their investment methodology and framework.

I was also sent a link to their website containing link to two whitepaper underlying their methodology.

I have to admit I don’t fully understand what is being written in these white papers but in simplest term I believe Syfe view risk as a function of not only portfolio allocation but also market volatility.

Graph extracted from the paper “Constant volatility framework for managing tail risk” sourced from Syfe

They view probability of outsized “drawdown” or losses as being greater in period of market volatility hence will rebalance the portfolio for the increased risk by shifting away from normal % of equity/bond allocation.

The theory is that by avoiding the worst of the downturn the portfolio will not have to recover as much to outperform static portfolio.

Their recent performance in rebalancing through the market downturn show that their framework is capable of reducing portfolio risk in a real market downturn. The jury is still out on whether they can be as nimble on the uptrend as well since they have missed the rally over the last 8 weeks.

Since my initial post yesterday, DJI was down 1,861 points (6.9%) last night.

This rally have been illogical in light of the poor underlying economic data and was built upon assumption of a perfect recovery from the Covid shutdown. Many market observer remain skeptical but I honestly do not know enough to have an opinion either way but is selecting stock for my active portfolio with plenty of margin of safety to weather any economic downturn.

Time may vindicate Syfe’s decision to stay on the sideline. I honestly do not know how well their framework will work and how consistently they will be successful.

But I have to say their customer service have been top notch allowing me to speak to their advisory team prior to committing fully to a portfolio with them.

By contrast my email to Stashaway remain unanswered since 10th June.

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