The core portfolio is largest strategy in the Lions Bay Fund at typically between 50-60% of the AUM. Over the fullness of an investment cycle, this portfolio will be the largest source of returns for our investors. The Core Portfolio is comprised of 20-30 long term investments in high quality businesses. We stay true to our rigorous bottom-up, fundamental investment ethos to discover high-quality, well-managed, and uniquely advantaged companies that can prosper through a full business cycle. This portfolio has a low turnover and benefits from rising equity markets.
An actively managed portfolio of shorter term, the transactional portfolio makes tactical investments. It typically accounts for between 20-30% of the fund and over the fullness of an investment cycle, providing our investors with returns that have a low correlation to equity markets. This portfolio is highly opportunistic in nature and allows us to capitalize on short-term opportunities that emerge during periods of market volatility. As an active manager, we often spot short-term opportunities in companies or sectors that although may not fit our core portfolio criteria, they still represent a profitable trading opportunity. Some examples of this are cyclical businesses and event-driven position with extreme sentiments. Through our research process for the core portfolio, the insights we gain often drive trade ideas for the transactional portfolio. This portfolio has a high turnover and benefits from volatile markets.
The Lions Bay Fund employs a disciplined risk management strategy to help protect our investors during periods of market turbulence. We actively spot opportunities to purchase low cost insurance on our portfolio against equity declines. The value of these instruments rises dramatically during periods of equity market volatility, allowing us to sell them and add the profits to our core portfolio investments that are trading at attractive values. Our hedging practice typically involves buying put options on equity indexes and single stocks. This portfolio typically fluctuates between 1-3% of the fund and over the fullness of an investment cycle, will be a small drag on returns. This portfolio benefits from a rise in equity volatility, particularly when it occurs in a violent fashion.
Justin Anis, CFA is the portfolio manager of Lions Bay Fund, a North American equity strategy, for which he won the BarclayHedge Top 10 Monthly Performance Award for in August 2019. After starting his career with Wealhouse Capital in 2008, Mr. Anis managed portfolios for SW8 Asset Management and a family office in Oakville, ON before rejoining Wealhouse in 2016. Mr. Anis has been a CFA charterholder since 2012.