Investment Process
Pella's investment process is composed of 12 inputs, which are divided into four stages: Incubation, Discovery, Exposure, Audit ('IDEA')
IDEA GENERATION
Filter investment universe to 1,800 stocks
Filter
Identify and follow specific stocks
Identificiation
Analyst prepares introductory report on targets
Preliminary Research
Outlines companies key drivers
CIO makes ultimate investment decision
DUE DILIGENCE
Investment Report
Collaboration
Decision
Team discusses the investment
AUDIT
Portfolio Adjustment
Portfolio Monitoring
Stock Monitoring
React if the outcomes of monitoring call for action
Ensure portfolio is balanced and compliant
Track performance of company versus thesis
EXPOSURE
Implement
Limits
Segments
Consider impact on whole portfolio
Ensure portfolio complies with exposure limits
Stock's placement is partly driven by its segment
Segmentation Strategy
Pella's Segmentation Strategy is a critical part of its process and involves dividing all companies in the portfolio in three segments (Core, Cyclical, and Innovation) to facilitate broad exposures in a risk-controlled manner
Weight | Return profile | Medium-Term Growth | |
|---|---|---|---|
Core | 60-80% | Stable | 5-15% |
Cyclical | 0-30% | Cyclical | >15% |
Innovation | 0-20% | Variable | >15% |
Core
Cyclical
Innovation
Portfolio Weight
60-80%
0-30%
0-20%
Return Profile
Stable
Cyclical
Variable
Medium-Term
Growth p.a.
5-15%
>15%
>15%
The "Core" of the Fund represents over 60% of the portfolio and targets companies offering stability and growth, forming the bedrock of the portfolio
"Cyclical" companies represent a maximum of 30% of the Fund. These companies benefit from powerful shorter-term cycles, allowing the portfolio to respond to changing economic dynamics
"Innovation" offers exposure to innovative, fast growing, and distruptive businesses in a risk controlled way with a maximum of 20% of the fund allocated to this segment