Illiquid Assets Avoided Tuesday 23rd January 2018

Coburn Barrett avoids real estate because it is not sufficiently liquid. It does not include corporate bonds because it believes their key risk is captured via the equity and fixed income exposures already in place. Fixed income exposure comes from sovereign bonds and money market instruments.

It strictly avoids other securities that do not meet its proprietary standards. To provide adequate exposure to “emerging” markets such as Chinese or Brazilian equities, Coburn Barrett invests, for example, in Hong Kong’s Hang Seng rather than Shanghai’s CSI 300. Similarly, highly correlated proxies are used for other equity markets as appropriate. It uses carbon credits to supplement its commodities exposure, alongside energy, soft commodities and precious metals.

Coburn Barrett’s competitive advantage results from its ability to, in effect, reduce the global investible universe in to a representative portfolio of liquid instruments. This optimally diversified portfolio, theoretically, could then be levered or de-levered to provide a desired risk profile. Coburn Barrett also manages segregated accounts for clients at different risk levels to the GLI fund.

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