How to lower your risk and maximise returns

How to lower your risk and maximise returns

Small caps are often thought of as being high risk, but that doesn’t have to be the case. With the right approach, it’s possible to maintain a moderate level of risk, while still producing outstanding returns.

This is exactly the approach that Richard Ivers, Portfolio Manager at Prime Value, takes in managing the Emerging Opportunities Fund. By focusing on high quality businesses with relatively few risks and strong competitive positions, he’s managed to outperform the market in 87% of months that it fell.

“A shorthand method for working out quality is that if you can work out where the earnings will be and have a high level of certainty on where they’ll be in three to five years, typically, that means that it’s a quality business. Such a business will be able to withstand all the pressures and issues that may come at it.”

In this episode of The Rules of Investing podcast, he explains how his experience in the corporate world helps inform his investment decisions, we discuss a range of Australian companies across the finance, media, and beverage industries, and he details his low-risk approach to Aussie small cap investing.

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