Starfortis
Asset Management
Security
Diversification
WHAT IS DIVERSIFICATION
Understanding Diversification as a Security Measure
Diversification is an investment strategy that helps limit exposure to any single project, reducing risk.It is a fundamental investment management practice.
By spreading risk across multiple projects, we can minimise the impact of individual project underperformance.
USING DIVERSIFICATION
Our Approach to Diversification
Risk is distributed across a variety of projects at different project stages. This approach helps balance cash flow throughout the investment term.
Diversifying capital ensures stability and prevents dependency on any single project for returns.
DEFAULT WORKING EXAMPLE
Worst-Case Scenario
Assume a £10,000,000 fund size, with average investments between £500,000 to £1,000,000.
A £1,000,000 investment represents a maximum of 10% of the fund.
In a default scenario, if the Security Trustee stepped in and a fire sale occurred, the asset could be sold at 80% of market value. This would create a £200,000 shortfall.
Representing 2% of the overall fund.
REPAYING A SHORTFALL
Fund Rebalancing Strategy
In the event of a default, our irrevocable legal undertaking ensures the fund’s protection. Future project profits will be sacrificed until the fund is rebalanced.
This ensures that the overall fund stays in balance.
Note: A single project’s profit margin would be able to re-balance the shortfall if required.
MITIGATING INVESTMENT RISK
Securing Long-Term Success
Diversification is key to managing investment risk while ensuring stable returns. It is a cornerstone of our commitment to securing investors’ capital.
Our approach helps us safeguard the fund and ensures long-term success for our investors.
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