Conviction level - to reconcile signals

[danielkrizian]

Portfolio manager:
assign conviction (1-5)
determine position size

Positions are a result of a collegiate process, supported by the fact that there is only one ‘bonus pool’. Once trading opportunities/strategies are identified capital is allocated by the CIO with pre-defined parameters (entry and exit points) based upon opportunity (risk/reward analysis), diversification/correlation and liquidity, and allocated by the PMs. Position sizing is largely a factor of conviction and although the CIO has the final word (as long as within risk limits) the 'conviction level' will mainly be determined on a team basis. Lack of consensus will not mean that the position will not be taken but it will not be a large position.