Investment strategies

Managing a portfolio of investment capital, Alfa Resonance Capital Ltd solves two main problems:
  • Determines the risk and expected return on the investment portfolio, finding out the partner’s preferences regarding risk and return parameters, his tax regime, investment horizon, evaluating the transaction costs for the formation and management of the portfolio, determining the risk and expected return on the candidate assets to be included in the portfolio, and the degree of their correlation profitability.
  • Determines the real dynamics of portfolio indicators in the process of its management and, if necessary, revises it, that is sells and buys assets.
In managing the investment portfolio, our company identifies two main strategies:
  • Passive investment portfolio management – consists in acquiring assets in order to keep them for a long period of time. If the portfolio includes assets issued for a certain period of time, for example, bonds, then after their repayment they are replaced by similar securities until the end of the investment horizon of the partner. With this strategy, current changes in the asset’s market value are not taken into account, since in the long run the pros and cons of changing their prices will cancel each other out. A passive strategy does not involve an active portfolio review. In the conditions of an efficient market and the same expectations of investors, any individual selection of securities is not significant, and when choosing assets we are guided by indicators of their risk and profitability. If the portfolio consists of a small number of assets, it retains a significant share of diversified risk. To reduce it, our company adheres to a strategy called index copying. In this case, the market portfolio in its parameters should correspond to a broad-based index. He is taken for a market portfolio. Copying the index can be complete, i.e. a risky portfolio will accurately repeat the index.
  • Active management of the investment portfolio – consists in frequent review of the investment portfolio in search of financial instruments that are incorrectly evaluated by the market, and trading them in order to obtain higher returns.
However, the current market environment is quite dynamic and often difficult to predict. Therefore, the use of a condensed number of investment capital management strategies is not always acceptable and justified. Depending on the investment objectives, type of portfolio management, the nature of the economic situation and many other factors, Alfa Resonance Capital Ltd resorts to the use of alternative investment capital management strategies:
  • The strategy of an effective owner – not only in gaining access to certain types of products and ensuring control over financial flows, but also in improving the scientific, technical and supply potential, financial recovery of the issuing company. The main income received by the investor is long-term in nature and is formed as a result of the economic activity of the enterprise.
  • speculative mergers and acquisitions strategy – the acquisition of a controlling stake to provide access to scarce types of products (services), financial resources, or in order to obtain profitable real estate, other property and non-property rights.
  • auction strategy – the acquisition of shares and securities at the time of their initial sale at check, cash, and mortgage auctions held in the process of privatization.
  • strategy of a speculative competitor – used at investment competitions and closed cash auctions held during the privatization process, lies in the fact that the interests of the investor are several companies that seek to indicate in the applications such prices in order to enter the top two winners. On the one hand, this allows you to insure yourself in case of incorrect execution of applications or non-participation of other investors. On the other hand, if the interests of one investor are protected by several affiliated companies, then there is a greater chance of “guessing” the price.
  • arbitrage strategy – consists in using the fact that the same asset may have different prices in two different markets, including geographically remote ones.
  • the strategy of “vacuum cleaner” – the implementation of mass purchase of shares and securities, as well as other assets in the regions.
  • optimization strategies – building economic and mathematical models of the portfolio. The selection of the best portfolio structure is carried out by varying optimization criteria and conducting multivariate simulation calculations. Using optimization methods allows you to determine the portfolio configuration that most closely meets the individual requirements of the investor in terms of a balanced combination of risk, return and investment liquidity.
  • rating strategy – the formation and updating of a portfolio of securities is carried out on the basis of the result of constructing a rating table. The rating is calculated according to groups of indicators characterizing the main investment preferences of the investor. The portfolio includes shares of enterprises with the best rating. Accordingly, securities on the bottom lines in the rating table are excluded from the portfolio.
  • “flexible response” strategy – a participant, receiving market signals testifying to the interest of large foreign or domestic investors in the shares of one or another issuer, uses his opportunities to get ahead of competitors and start a massive buy-up from small investors in advance.
  • strategy of “market lead” – the investor is trying to independently make a forecast of the state of the market and use it to make a profit. Depending on the terms of returning the invested capital, our company identifies strategies for short-term, medium-term and long-term investments, as well as their combination.
A short-term investment strategy can be described as a strategy of “catching short-term fluctuations”. It proceeds from the fact that value rates are subject to frequent fluctuations, which are far from always adequate to real changes in the affairs of issuing companies.
Investors using this strategy are trying to profit from fluctuations in the course of the week, month, or during one trading session / auction. The basis of their activities is the development of short-term macro and microeconomic forecasts, the use of technical analysis methods. When using a short-term investment strategy, we take into account even insignificant market fluctuations of value rates and the events that trigger them, for example:
  • the expectation of an appreciation in connection with the completion of work on the issue of ADR;
  • a possible decrease in quotations with an increase in the authorized capital as a result of the announcement of an open subscription for shares;
  • fluctuations in international stock indices, etc.
A variation of this strategy is the scalping strategy. Moreover, one of the tasks is to provide a guarantee for transactions. Another prerequisite for the successful use of this strategy is the high speed of settlements.
Portfolio management based on a short-term strategy is based on the use of even small fluctuations in value, so maximizing profit is possible at very high speeds.
When formulating and choosing strategies, Alfa Resonance Capital Ltd uses the main and most reliable classification features:
  • capital growth;
  • receipt of regular current income;
  • a combination of capital growth and current income.