The Chiron Investment Process
At Chiron, our investment process is an actively managed framework that allows us to quantify fundamental factors, systematize our approach, and apply judgment to asset allocation and security selection. We look to discern what action managements are taking and what reactions this elicits from investors. The asset allocation framework is structured to seek to anticipate the conditions that lead to market drawdowns, while also anticipating the conditions that lead to rising markets. The security selection framework is built on two fundamental behavior pillars: earnings quality, which is a measurement of cash flow, profitability, and growth; and dispute, defined as a measurement of investor reaction to management behavior.
Creating a globally diverse, multi-asset portfolio is a significant challenge, specifically where to start when allocating capital. Advisors and clients often encounter this same challenge—where to start?—when constructing a global portfolio. At Chiron, we aim to understand our starting point using a proprietary framework that helps us determine the optimal conditions for taking and avoiding risk. We utilize two proprietary tools: the Chiron Domain Indicator and the Chiron Dispersion Indicator to help us identify in which investment environment we are allocating capital. These tools, or indicators, in combination help us to establish an anchor for portfolio construction.
At Chiron, we do not try to predict the future. We are highly aware of the narrative fallacy and the non-linearity of forecast error and its effects on client portfolios. Our fundamental research process is designed to provide insight around change in management and investor behavior. Understanding the interplay of this behavior and how change can affect investment outcomes is the lens through which we view portfolio construction and risk adjusted returns. By combining our proprietary tools with fundamental judgment, we believe we can understand the conditions that lead to successful investment outcomes, allowing us to Aim True for our clients.