Investment Risk Oversight

To achieve investment returns, a fund must incur investment risks. The goal of investment risk management is to ensure that those risks are understood, intended, and compensated. A fund’s adviser manages investment risk as part of its portfolio and risk management responsibilities. The fund’s board oversees the adviser’s management of investment risk.

Investment risk management by the adviser involves both controlling risk by limiting certain risk exposures, and thus the size and probability of losses, as well as using a number of active investment techniques that seek to align the fund’s investments with its investment objectives, its risk profile, and the portfolio manager’s investment convictions.