Portfolio Construction

Portfolio investment

From an investment perspective we focus on cash management, currency hedging, direct bond purchases and bond funds. With equities, we are mindful of net returns and primarily invest in index trackers along with a select number of specialist long-only managers. We also have access to best of breed Hedge Funds, Private Equity, and Real Estate products. All position sizes are rigorously controlled and adhered to with strict limits in place. Hassium's portfolios are defined by their simplicity and liquidity. A typical portfolio will contain approximately 20-25 positions.

Investment Selection


Most of a portfolio’s equity return is determined by geographical and sector allocation, rather than individual manager or individual security selection. As an example, in 2011 the S&P500 returned +2.10% for investors but the German DAX returned -14.7%. Having an overweight US index exposure generated superior 2011 returns. Nearly all of our equity exposure is through Exchange Traded Funds (ETFs) rather than active managers as ETFs are more cost efficient, liquid and long term performance should equate to their benchmark performance minus fees. We only invest into ETFs that are large, liquid, physically backed where possible and benchmarked against a broadly recognisable index.


We focus on purchasing individual corporate and government bonds so that we can control the credit quality, duration and specific issuer that our clients are exposed to. We purchase core government bonds in the client’s base currency, predominantly US, UK and German. Corporate bonds are all short dated (less than 5 years) and investment grade (BBB- or greater). When looking at individual bonds we take into consideration the purchase yield after transaction fees and custody fees, benchmarked against cash in the current environment. We generally do not trade bonds, we purchase with a buy and hold strategy.


As with equities we gain exposure to commodities through low cost liquid ETFs. We prefer physically backed ETFs and allocate to precious metals, base metals, agriculture and oil. Commodities can help offset currency fluctuations and provide exposure to global growth trends.

Hedge Funds

We invest in a small number of high quality hedge funds when it is appropriate for clients. We stay away from new or small hedge funds and look for those with a track record of more than five years that did not gate in 2008/09, and have an AUM in excess of USD 300m. We maintain strong relationships with the portfolio managers who offer research and market analysis as well as thorough updates on the funds.


We have the ability to place cash into money market funds, onto deposit or to purchase short dated cash alternatives to generate the maximum available yield for cash. When appropriate we may use short term sovereign and corporate debt as a cash alternative.


Currency allocation is a major contributor to portfolio risk and return. The biggest allocation will always be the client’s base currency. Typically, the main currencies include USD, EUR, CHF and GBP and the allocations vary depending on client objectives and market conditions. We execute Forward FX trades to hedge against currency risk and increase the allocation to the base currency of the portfolio. We may also use FX trades to gain exposure to a range of alternative currencies although, with a focus on risk management and wealth preservation. Note we do not trade or speculate with currencies.