Most investment firms rely on commercially available software or services to design and implement their investment strategies. Over-reliance on these vendors can lead to risks, as a firm is relying on the accuracy and validity of the information or capabilities provided by selected vendors, rating services, market data, and the issuers themselves.
As described in our process, the investment strategies managed by Ethical Capital are primarily based on internal research. This may reduce the risk of receiving incomplete information from third parties, but also comes with the risk that our own research processes will miss key factors, which may lead to worse investment outcomes. Our philosophy on this is described in this essay.