Kate Capital’s investment process integrates top-down macroeconomic analysis with structured tools and collaboration to identify mispricings across equities, rates, currencies, and commodities.
Explore the specific steps of our investment process:
1. Idea Generation
Idea generation begins with a global macro assessment: where growth and inflation are headed, how central banks are likely to respond, and how these dynamics differ by region and country.
This process is anchored in continuous research and market dialogue. We are engaged daily in a conversation that begins each morning and evolves throughout the day as new information, data, and policy developments emerge. We then connect these views to market pricing, examining what is currently discounted in asset prices and looking for divergences between our assessment and price.
2. Opportunity Selection
We convert macro views into trades by looking for divergences between what is priced by markets and what we believe is likely, evaluated through three lenses:
Value
Is the asset cheap or expensive relative to fundamentals and other technical measures? We assess whether the risk premium embedded in price is adequate (e.g., equity earnings yield vs. bond yields, term premia, real vs. nominal pricing).
Flow
What are positioning and flow dynamics. We evaluate who owns the risk today and who must buy or sell next (e.g., CTAs, macro funds, pensions, retail), using our Signals dashboards (including CTA models) and external sources such as CFTC/regulatory data and broker flow color.
Catalyst
What event or force will create a change in consensus. We map upcoming data releases, central bank meetings, and policy steps; run scenario analysis around those events; and estimate asset level price impacts under each scenario. Catalysts transform a cheap asset into a timely trade.
3. Portfolio Construction
Quality portfolio construction process rests on three pillars:
Diversification Across Markets
We invest across asset classes and countries, and can build portfolios with greater resilience and consistency than strategies limited to a single asset class or region.
Disciplined Risk Management
A rigorous risk control process is used to size and adjust exposures, with the objective of maximizing return per unit of risk while maintaining balance across themes and positions.
Experience Across Market Cycles
We have decades of experience trading global markets which informs how we assess behavior under stress and identify both risks and opportunities. The team has navigated multiple major cycles, including the Global Financial Crisis, the Eurozone crisis, and the COVID-19 pandemic.
4. Risk Controls
Risk is anything that can cause you to lose money.
We do not believe that any single number can perfectly capture portfolio risk and embed risk controls throughout our research process and conversations, so we rely on a range of metrics to understand the exposures we are running.
