Investment Philosophy and Process
A systematic approach to portfolio management, risk control, and performance measurement.
Investment Philosophy
Active Management as Core Value
RFA operates on the principle that markets are inefficient across observable timeframes and geographies. Alpha generation requires disciplined research, security-level analysis, and active position management. Passive strategies serve as benchmarks, not substitutes.
Risk as a Managed Variable
Volatility is not avoided—it is understood, modeled, and managed within defined tolerances. Risk is intentional. Portfolios are stress-tested against historical scenarios, correlation breakdowns, and tail events. Exposure is adjusted systematically as conditions evolve.
Benchmark-Driven Accountability
Every portfolio is measured against a relevant benchmark, agreed upon at inception. Alpha is defined as excess return above this benchmark, adjusted for risk. Performance is reported transparently. Benchmarks ensure alignment, discipline, and fiduciary accountability.
Client Interests First
RFA operates under a fiduciary standard. All investment decisions are made in the client's best interest. Fees are disclosed upfront. Conflicts of interest are eliminated structurally. Transparency governs communication, reporting, and relationship management.
Client Discovery and Constraint Definition
Portfolio construction begins with understanding the client. Strategy design follows from constraint mapping. RFA conducts a detailed assessment of each mandate's parameters before any capital is deployed.
Financial objectives: Return requirements, income needs, capital preservation goals
Time horizons: Investment period, withdrawal schedules, generational considerations
Liquidity constraints: Cash flow obligations, operational requirements, emergency reserves
Risk tolerance: Acceptable volatility bands, drawdown limits, psychological capacity for loss
Regulatory and structural constraints: Tax considerations, jurisdictional rules, entity structure
These inputs define the solution space. No portfolio is constructed until constraints are fully documented and agreed upon.
Strategy Design and Benchmark Alignment
Once discovery is complete, RFA designs a strategy tailored to the client's profile. This process translates constraints into actionable investment parameters.
Asset Allocation Framework
Strategic allocation across equities, fixed income, alternatives, and cash. Tactical ranges defined for active positioning. Regional and sector exposure mapped to opportunity set.
Risk-Adjusted Return Objectives
Target return established relative to client goals and market conditions. Risk budgets assigned by asset class. Sharpe ratio and maximum drawdown thresholds defined.
Benchmark Selection
A relevant benchmark is selected and agreed upon at strategy inception. Benchmark reflects the investable universe, risk profile, and strategic allocation. Performance is measured against this standard.
Alpha Definition
Alpha is explicitly defined as excess return above the agreed benchmark, adjusted for risk taken. Active management seeks to generate alpha through security selection, timing, and position sizing.
Alignment and Documentation
Strategy documentation includes objectives, constraints, benchmarks, fee structure, and reporting cadence. Expectations are aligned before deployment.
Portfolio Construction and Execution
Strategy translates into an investable portfolio through systematic security selection and disciplined execution.
Security Selection
Individual securities are selected based on proprietary research, valuation models, and market inefficiency identification. Fundamental analysis drives position initiation and sizing.
Asset Class Deployment
Portfolios are constructed across equities, fixed income, ETFs, and alternative strategies as appropriate. Deployment spans Sub-Saharan African capital markets and global developed markets including the U.S., Europe, and Asia.
Strategic and Tactical Positioning
Strategic allocation reflects long-term views and client objectives. Tactical adjustments are made in response to market conditions, valuation changes, and emerging opportunities.
Long and Short Strategies
Where appropriate and permitted, portfolios incorporate long and short positions to express views, hedge risk, and enhance returns. Short positions are used selectively and managed within defined risk parameters.
Execution Discipline
Trade execution is precise and cost-conscious. Liquidity, market impact, and timing are considered in every transaction. Execution quality is measured and reported.
Continuous Oversight and Optimization
Portfolio management is an ongoing process. Performance is monitored, risk is measured, and positions are adjusted systematically.
Performance Monitoring
Returns are tracked daily. Performance is measured against benchmark, risk-adjusted metrics, and client objectives. Attribution analysis identifies sources of return and risk.
Risk Management
Risk is monitored across multiple dimensions: volatility, correlation, concentration, credit, liquidity, and systematic exposure. Stress tests are applied to portfolios under hypothetical and historical scenarios.
Benchmark Comparison
Portfolio performance is regularly evaluated against the agreed benchmark. Tracking error, information ratio, and alpha generation are measured and reported to clients.
Rebalancing and Adjustment
Portfolios are rebalanced to maintain strategic allocation targets and manage drift. Tactical adjustments are made in response to changing market conditions, valuation shifts, and new opportunities.
Reporting and Communication
Clients receive regular performance reports, risk analysis, and portfolio commentary. Communication is transparent, detailed, and timely. Review meetings are conducted quarterly or as agreed.
RFA Capital Advisors partners with clients who expect discipline, transparency, and performance. If this aligns with your investment philosophy, we welcome the conversation.
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