ESI Capital Management specializes in global macro investment management. Our framework begins with the premise that the business cycle is among the most reliable recurring patterns in economics. Fluctuations within the business cycle not only affect asset prices to a great extent – it is probably the largest driver of investment return volatility. Our core investment strategy aims to benefit from cyclical expansions and to preserve capital during contractions.

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Although backed up by abundant historical evidence, the approach is different from the standard asset management methods. Passive investing and the typical 60/40 portfolio allocate constant weights to stocks and bonds throughout the entire economic cycle. However, historical evidence reveals that a static 60/40 stock/bond asset allocation is most often too risky during late-cycle stages. Traditional portfolio theory does not account for the dynamics of the business cycle and leaves risk misaligned, especially during early- and late-cycle stages. Our proprietary research focuses on correcting this shortcoming. We specialize at assessing the stage of the business cycle and rebalance the portfolio accordingly.

"We don’t need to reinvent the wheel. However, we must be able to assess when it is worn out and needs replacement." -  Robert Lefter

Long-term empirical evidence revealed distinctive performance characteristics across asset classes and cycle stages. Equities performed historically best during the first half of the business cycle and disappointed most often during the late second half. On the contrary, high-grade government bonds had their best performance during the late second half of the business cycle. We take account of these relationships by rebalancing investment portfolios along the business cycle.

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The active approach gets implemented on a bespoke client level to meet individual needs. It is not suited for everyone. However, investors with a mid- and long-term focus can benefit from capital appreciation and purchasing power preservation through global diversification. They invest based on consistent long-term research performed and challenged by academic experts who have no conflict of interest regarding their results.