What is a high-conviction approach?

What is a high-conviction approach? High conviction is a style of active management that is expressed through portfolio construction.

Without deploying a consistent high-conviction approach over time, it is hard for any manager to beat the benchmark or passive fund equivalent for their target sector. Investing with conviction means sticking to your investment style through the cycle – which allows you to weather uncertainty.

High-conviction investing means hitting the mark

Investor Round Table hosted by Citywire

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How can you measure conviction?

High-conviction strategies share certain characteristics, such as

More concentrated portfolios – measured by number of holdings
Strong understanding of, and comfort with, investments – measured by longer holding periods
Style-consistent performance – measured by performance behavior in up- and down-markets over multiple market cycles

"Conviction is about having confidence in our philosophy and approach – repeatedly, no matter what. Equally important is our demonstrated ability and track record of carrying it through."

Matthew Benkendorf, CIO, Quality Growth Boutique

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How can you measure conviction?

Portfolio managers develop their conviction by repeatedly applying their investment philosophy, while adapting it to the current market environment. What do investors need to observe when considering a high-conviction approach?

Bring some patience

Investors with a short investment horizon and sensitivity to short-term underperformance may not be comfortable investing in high-conviction approaches. Empirical evidence suggests that long-term investors are up for a much better experience.

Know your facts

Many managers show selective evidence, such as a high active share, to declare themselves as high conviction. But that does not necessarily make them high-conviction managers. Does their investment philosophy and process evidence independent thinking?

Ask difficult questions

High-conviction managers can be wrong, so you want them to acknowledge this. It is important for a fund manager to be able to understand their faults and explain the drivers of their performance.

Investing with conviction

Why difficult markets demand a high-conviction approach.

What is a high-conviction approach?

High-conviction investing means hitting the mark

Investor Round Table hosted by Citywire

How can you measure conviction?

High-conviction strategies share certain characteristics, such as

How can you measure conviction?

Portfolio managers develop their conviction by repeatedly applying their investment philosophy, while adapting it to the current market environment. What do investors need to observe when considering a high-conviction approach?

Bring some patience

Investors with a short investment horizon and sensitivity to short-term underperformance may not be comfortable investing in high-conviction approaches. Empirical evidence suggests that long-term investors are up for a much better experience.

Know your facts

Many managers show selective evidence, such as a high active share, to declare themselves as high conviction. But that does not necessarily make them high-conviction managers. Does their investment philosophy and process evidence independent thinking?

Ask difficult questions

High-conviction managers can be wrong, so you want them to acknowledge this. It is important for a fund manager to be able to understand their faults and explain the drivers of their performance.