We believe there are many factors that give us a competitive advantage over other managers. TFS utilizes a team approach, which we believe greatly reduces the chance of irrational decision-making and limits dependence on a single individual. We also have a stated principle to limit growth because we believe that managing a smaller pool of capital generally permits more attractive investment opportunities.
We believe that our innovative quantitative techniques expedite our evaluation of securities, which allows us to make faster adjustments to the portfolios being managed. Finally, our portfolio managers do not have traditional “Wall Street” backgrounds, which we believe helps us to avoid overused analysis methods that may be losing their utility.
Avoid the Status Quo
TFS has found that the best opportunities exist where others do not think to look. As such, the firm seeks to employ creative portfolio managers with non-traditional backgrounds in an effort to avoid the pitfalls of relying on pre-conceived notions about what factors drive the securities markets.
Ignore the Style Boxes
TFS believes the best results are generated when a portfolio manager is given greater freedom in regard to the securities that may be chosen. As such, with many of our products, we do not allow ourselves to be confined to a single style, sector or market capitalization range. Rather, TFS considers a broad universe of securities and selects positions based upon a detailed bottom-up analysis.
Use an Academic Approach to Strategy Research
TFS manages funds using its own proprietary investment strategies that are developed by an experienced team of portfolio managers. Similar to academic research, a candidate strategy must be supported by a solid foundation of qualitative research and must also, through trading simulations, empirically demonstrate an ability to produce positive abnormal return.
Perform Rigorous Quantitative Analysis
TFS gains an edge through its exhaustive quantitative analysis of potential investment strategies. Upon developing a potential investment strategy, TFS will perform a trading simulation of the strategy using actual historical data for the securities used. Through the simulation, TFS is able to quantify whether or not certain factors have historically been predictive of security price movement.
With the abundance of information that is available on the markets today, it is critical to leverage the power of information technology for trade-execution and ongoing research and development. As such, we are committed to incorporating technology in all aspects of our portfolio management process. For example, trades are executed using electronic routing technologies that are designed to obtain favorable executions. In addition, we use sophisticated optimization and analysis software, along with proprietary computer programming, to evaluate strategies and monitor risk.
Strategically Manage Risk
When managing investment funds, our first consideration is capital preservation because we believe it is the most significant factor in generating enhanced long-term performance. Our entire portfolio management process is directed by a team of managers, thereby reducing dependence on a single manager and facilitating rational decision-making. This team establishes parameters for strategy implementation that are designed to mitigate exposure to certain risks. Parameters are then monitored on an ongoing basis to ensure that certain thresholds are not compromised.