Hanseatic's investment process is the combination of proprietary buy/sell disciplines, bottom-up portfolio construction and risk management methodology. The objective of the investment process is to create positive risk-adjusted alpha in a consistent way. The buy disciplines entail a proprietary trend measurement which takes into account three operative time dimensions - monthly, weekly and daily. The purpose of the buy disciplines is to identify stock price trends which in aggregate have the potential to persist into our target holding period (6-36 months). Our research has shown that there are time boundaries in the relevant time dimensions which also play an important role. It is the intersection of multi-time dimensional trend measurement and time boundaries that is the foundation of our buy disciplines. The sell disciplines are designed to identify points in time when the risk-reward relationship over an intermediate time frame becomes unfavorable. Changes in the risk-reward relationship may follow a period of objectively-measured underperformance relative to the benchmark or coincide with various gauges of excess volatility. The purpose of the sell disciplines is to control individual security risk in a consistent manner while allowing individual stocks with positive intermediate-term alpha to remain in the portfolio. Each stock is subject to defined, albeit dynamic, risk management. Portfolio construction is a bottom-up process which manages overall portfolio risk by way of position-sizing and diversification. The buy disciplines over and underweight market sectors and industries by adapting to relative market leadership in a dynamic way. However the weightings have guidelines defined for sectors and industries, +/- 10% and +/- 5% respectively. Initial position sizing ranges from 0.5-1% of the portfolio.
Intelligent diversification is a cornerstone of our investment process. The cumulative investment process enables portfolios that are adaptive to changing market environments and achieve positive alpha in a consistent manner. Through ongoing research the company endeavors to improve its alpha-generation capabilities and its ability to manage the portfolio risk-reward relationship. The company has evolved with the experience and development of its investment professionals. This will remain a key goal. THIS IS A MANAGED ACCOUNT PROGRAM, NOT A FUND.