How To Invest
Searching for Hidden Value
Opportunities in equities arise from investing in stocks directly exposed to specific themes or indirectly benefiting from the same.
Equity investments could range from larger capitalisation stocks to very small niche companies uncovered by conventional analysts.
Equities can offer both financial and operational leverage, without margin leverage.
Investing in actively managed funds could provide the opportunity to gain exposure to certain themes.
However, there are few funds available for unconventional themes, and management costs can be a factor.
The proliferation of ETFs, and related instruments (such as ETNs and ETCs) means that these can be a good way to obtain passive exposure.
However, ETFs are typically ‘dumb money’ in that they are usually market-capitalisation weighted and so take no account of valuation opportunities found in individual equities.
Typically futures and/or options, these can offer highly margin-leveraged exposure to certain themes.
However, they carry additional risk, including volatility, term structure, time value, and liquidity, that requires an additional level of analysis on top of theme selection, and are often not suitable for private investors.
Proxies can be used to gain direct or indirect exposure to specific themes.
However, although typically at the lower-risk end of available instrumentes, these tend not to offer either financial or operational leverage and so can significantly reduce potential returns.
Some of the best asymmetric investment opportunities around, researched and curated for you.
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