Our investment framework emphasizes THREE essential components:

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Gamma - the CYCLE, asset allocation is the key to cope with expansion and recession over time. The percentage of each asset in a portfolio is adjusted according to the stage of the business cycle. Assets that will outperform in the next three years are highly recommended in our model. Under current circumstances, Treasury Inflation-Protected Securities would benefit from a high level of interest rate and should be outweighed in the portfolio correspondingly.

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Beta - the RISK, investors should be compensated for the risk they take in all market environments and any investment strategy. The types of risk for varied assets need to be carefully identified, assessed, and diversified to avoid an over-concentration of the same sort of risk in a portfolio. For instance, a treasury bond has both interest rate and inflation risk, while a private equity fund is subject to political, industry, profitability, corporate governance, and liquidity risks other than the two risks a bond has. A combination of these two assets would efficiently diversify the risk and contribute to a higher expected return.

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Alpha - the EXCESS RETURN, we hire the best fund managers to obtain the opportunity of excess returns. whether it is allocating external funds or our actively managed internal funds, we value the talent value of fund managers.

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We firmly believe that digging deep into the investment field, coupled with the team’s over 100 years of global investment experience, will create stable and excellent investment performance across cycles.

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Merit AM Founding Investment Team

Oct 2023