Investment Approach

our approach

Investors typically rely on one or two asset classes in building a diversified portfolio for growth. The problem is many asset classes tend to be as cyclical as equity markets, leaving the portfolio exposed to volatility and risk. Doshi Capital Management relies on multiple market and economic factors, and our deep understanding of how they contribute to price movements to invest in different asset classes through the use of tactical asset allocation. We believe that is the key to achieving positive returns in any market environment. Our strategies are designed to temper portfolio risks over time by avoiding significant market declines and losses in investor portfolios.

Reducing Risks

Very often investors who employ diversification strategies to reduce the long-term impact of price fluctuations tend to focus on diversifying away unsystematic risk having to do with individual stocks, leaving their portfolios vulnerable to more unpredictable systematic risk, driven by market volatility. Doshi Capital Management seeks to achieve true diversification by employing tactical asset allocation strategies to invest in different asset classes with different return drivers. The expected outcome is to potentially minimize portfolio volatility while capturing returns in both up and down markets.

Avoiding Market Declines

While diversifying across multiple asset classes may reduce portfolio risk, it does not protect portfolios against significant loss or drawdowns. Risk management is embedded in our process to guard against steep market declines and declines in individual portfolios. Our process includes a daily assessment of our models’ processes and performance along with the use of proprietary tools designed to keep our investors in the market during its smaller and more natural fluctuations.

what is true diversification?

Diversification is a key element of most investment portfolios for purposes of controlling risk and reducing volatility.

Most investment managers use broad indexes and ETFs to diversify their portfolios, but that only protects against unsystematic risk, which is associated with a particular stock. Other investment managers may employ long-short strategies to deal with systematic risk, also known as volatility or market risk, which is both unpredictable and more difficult to avoid. But few investment managers deal with both.

Conventional wisdom says you can’t diversify away all risk. Some investment strategies seek to reduce systematic risk while others seek to minimize unsystematic risk. We seek to minimize both by employing true diversification in two ways: by diversifying the factors that impact returns, and by using an uncorrelated investment strategy. This creates the opportunity to generate absolute risk-adjusted returns during any market cycle.