By avoiding large declines, the long-term increase in value is improved through the interest-on-interest effect.
We don't try to time the ups and downs. We use our systematic risk management to always be fully exposed to the opportunities in the market.
Derivatives are key in our positioning and are used to control the portfolio's return and risk level. With derivatives, we protect the portfolio against negative market movements.
Not just an ethical choice, but a key to long-term profitability and reduced risk in a changing world
Crescit's management philosophy focuses on reducing the risk of large declines in value in the portfolio. By making the portfolio less affected by fluctuations in underlying assets, Crescit can keep more capital intact and thus "keep the powder dry." This allows capital growth from a higher level when the market turns.
An example of the benefit of this strategy is that a 50% fall in value requires 100% growth to return to the starting level. By limiting downturns, Crescit can more quickly achieve positive returns and create stable and sustainable capital growth over time
"Interest-on-interest is the eighth wonder of the world"
By leveraging the interest on interest effect, Crescit achieves its financial goals with lower risk, as the cumulative effect of reinvested returns reduces the need to seek high-risk investments. This strategy allows for smooth and stable growth over time, reducing the pressure to deal with short-term market fluctuations. In addition, compound interest promotes a long-term perspective, which can lead to better investment decisions and less emotional stress. By focusing on a balanced portfolio, Crescit can effectively maximize returns while controlling risk.
Risk management is a central part of Crescit's portfolio management. The risk of losing money is continuously weighed against the potential upside. Good risk management is not renouncing risk but understanding the position and what opportunities are given for the risk taken.
"Rule number 1: never lose money. Rule number 2 never forget rule number 1."
The key to effective risk management is to see if the house when the sun shines, when the rain comes it is too late or in any case too expensive. Crescit strives to create an automatic asymmetry between risk and potential. We strive for a long-term return with a clear focus on avoiding large declines.
At Crescit, we use derivatives to tailor our investment strategy. Derivatives give us the opportunity to control expected outcomes and manage risks. Making our investments via options increases flexibility in management and frees up capital to combine different asset classes and their respective opportunities.
Crescit's management philosophy focuses on streamlining risk. By using stock index derivatives, we can tailor the exposure and control over potential outcomes. This gives us a powerful tool to shape the risk/return profile of our funds.
Options have a built-in asymmetry between risk and return. Derivatives management provides a unique opportunity to limit the downside without compromising the long-term potential. Over time, a more stable return is created, which provides the conditions to utilize the interest-on-interest effect.
At Crescit, we take advantage of the fact that derivatives bind limited capital to create efficient and flexible investments. The improved capital efficiency enables quick adaptations to changing markets and conditions. With the released capital, management can focus on sustainable investments that make a difference for the future.
Crescit works actively to create long-term value through sustainable investments that benefit both society and the environment. We comply with the EU Transparency Rules (SFDR) to provide our investors with clear information about how their money is being used to support a more sustainable future.
Our sustainability work looks different in our different funds and products. We therefore recommend that you read the specific information for the fund you are interested in to understand exactly how we work with sustainability in that particular investment.
Crescit has been a signatory of UNPRI since 2015 and uses reputable partners to ensure that Crescit's core values are met in our investments. We see and understand the problem that we are small allocators, but believe that by putting ourselves in a context, we can make a difference.
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