While constantly bearing in mind that risk is commensurate with the expected return, our team of equity researchers identifies investment opportunities by comparing information from different sources and by combining various methods of analysis. The risk/reward ratios of our recommended stocks are varied enough to accommodate a broad range of investor profiles.
The job of our equity analysts is to bring life to the equities segment of the asset allocation grids devised by the Bank's Strategy Committee. We take a manifold approach to this process, starting from the macroeconomic scenario projected by our economists. The fundamentals and momentum of each sector of the economy are analysed in detail, along with individual companies' operating performance, financial condition and market position. These data are rounded out with presentations, visits to the firms, consultation of brokers' reports and websites and input from fund managers. All of these considerations are cross-checked to form a conviction on each stock, which then has to be assigned an actual and a relative valuation. Chart analysis helps to fine-tune the timing of our recommendations.
The aim of this process is to select shares that can be used to implement our Bank's investment strategy, to exploit deep-running themes and to seize opportunities arising from temporary price distortions.
The equity universe that we draw from has to be flexible and dynamic enough to include new companies and niches. Moreover, our pick of recommended stocks has to be broad and diversified in terms of geographical and sectorial coverage, in terms of market capitalisation and free float, and in terms of risk profile and investment style (growth stocks, value stocks, turnaround plays, etc.). And it must also be able to sit well with all three major aspects of your management profile, i.e. your tolerance for risk, your investment time horizon and your base currency.
Our communications media have to be as reactive and readily accessible as possible for your account manager. In addition to Themes & Tactics, a monthly review covering the investment outlook as well as our recommended sector allocation, and Stockmarket Review, a weekly roundup of financial news, we use our intranet site to instantly update our comments, ratings and price targets in a spec sheet on each of the stocks that we track.