Philosophy

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• Risk management is paramount to generating alpha. Trowbridge places a significant focus on drawdowns and the Sortino Ratio rather than overall volatility or the Sharpe Ratio.

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• Using the same generic factors cannot generate meaningful excess market returns. If the majority of investors focus on widely followed factors there is no diversification away from mass market participants.  Thus we do not believe that factors provide meaningful excess return premiums.

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• Indices weighted by market capitalization are inefficient and present greater risk.

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• Forecasting stocks’ future rates of return are not required to outperform the market.

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• Mitigating volatility generates superior CAGR (Compound Average Growth Rate) over a market cycle.

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• Long-only investment strategies must focus on risk management and alpha capture and not just long beta.

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• Being highly correlated to an index may be safe, but doesn't allow for true alpha generation, thus tracking error is not part of our portfolio construction. 

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Proprietary Process

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At Trowbridge, we believe based upon empirical evidence and research, that if a long-only strategy executes the right risk management methodology to mitigate downside risk, hedging is not necessary to neutralize risk over a market cycle. With a systematic risk management process we believe we can generate long-term out-performance over a market cycle.  

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Trowbridge focuses on using our proprietary quantitative models for a mathematical research-driven process that looks at information differently than our peers for risk mitigation. Thus this allows us to dynamically manage risk, security selection, and portfolio optimization. 

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1.) Dynamic Price Discovery:  Our selling process is not based upon quarterly, semi annual or annual rebalance.  Our selling process is dynamic on a case by case basis for each position. Our strategies seek to identify the critical turning points in assets and be proactive in terms of risk mitigation. Our edge within this factor comes from our proprietary model's ability to reduce momentum volatility to aid in robust confirmation of price. 

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2.) Risk management: Our risk model attempts to avoid crowded trade behavior, momentum crashes and overreaction bias. Additionally, this risk model takes into account both security and portfolio level volatility. 

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