Risk Management

Concept of Risk Management

Proper diversification of sectors and individual stocks.
Large position and long-term holding of stocks with deep understanding in the balanced portfolio.
No more than 25 names in the portfolio to make sure full fundamental coverage.
Keep decent liquidity of the portfolio to guarantee at least 10% of NAV can be liquidized in single trading day.

Indicators of Risk Management
If the market price of any individual stock is more than 20% lower than buying price, the weighting of it has to decrease to lower than 5% except for other unanimous decision made by investment committee.
If the portfolio NAV decrease by more than 2% in single day, the investment team has to reevaluate the market and to determine weather or not to modify market house view and adjust portfolio accordingly.
If the portfolio NAV decrease by more than 5% in single week or 10% in single month, the investment committee should immediately make a plan to reduce the portfolio risk exposure and to reconstruct the portfolio accordingly.