What is a high conviction portfolio?
High conviction portfolios contain holdings of securities that an
investment manager believes will have the highest expected return,
in essence their best ideas. As a result, high conviction portfolios
are expected to generate a higher level of return than a manager’s
standard portfolio.
A high conviction portfolio typically comprises large holdings of
a relatively small number of stocks. An investment manager will
therefore pay little attention to country, industry and stock
weighting relative to an index benchmark when constructing this
type of portfolio. As a result, the expected risk or volatility of the
portfolio is also higher.