Country risk has at some stage caught most long and short term investor by surprise. Recent country banking crises, economic collapse, regime changes and regulatory failures have all had far more impact on portfolios than individual industry or company events.
Meanwhile, some countries that have been perceived as highly risky have grown strongly following critical policy changes. Surprise has quickly turned to concern as investors try and understand how to recognise and measure the impact of these risks. Some key questions are emerging:
How do I incorporate country risk and opportunity analysis into an overall security selection strategy?
More fundamentally, how much is any investment's performance attributable to country strength and resilience?
What we do
Country Insights' QCA and MIP indices help investors measure the risk and unappreciated value within countries. We help investors to:
Integrate country anaysis into their existing models and research processes
Improve risk adjusted returns by identifying mispricing of assets based on country risk and growth prospects
Help fund managers demonstrate a sophisticated and prudential approach to risk taking to investors, shareholders and regulators
Identify opportunities in both major markets where risk may be insufficiently appreciated and more esoteric markets where risk may be exaggerated.
The systematic and quantitative nature of QCA enables rapid, cost-effective delivery that can be integrated with the client’s existing systems and models. QCA does not select individual securities and as such can be used in conjunction with other security selection strategies.
Our extensive backtesting across many assets classes and markets has shown that QCA-driven portfolios consistently outperform the market by avoiding risk and identifying underappreciated opportunities. We currently use one of these strategies to successfully invest our own money.