Viking Harbour has access to innovative products globally. In this example, a long only US equity product that has shown outperformance in periods of high market stress as defined by the VIX index. 

In times of market turbulence, investors often seek safe havens, a phenomenon encapsulated in the concept of “Crisis Alpha.” This principle is particularly evident in the flight to quality associated with well-governed companies, which tend to exhibit resilience and outperformance during volatile periods. 

The Market Neutral Strategy capitalizes on this dynamic, using an investment strategy that emphasizes the intrinsic value of superior governance. Here we explain how the Strategy navigates market uncertainties by prioritizing governance excellence. 

The “Stewardship Model” brings together the novel quantitative research behind the Good Governance strategy combining it with portfolio construction excellence.  The Strategy has been developed over a 15 year history of evidence the model with our partnership with Lausanne-based Stewardship & Governance Associates (SGA). It has demonstrated that the language used by senior executives is indicative of the quality of corporate governance and company culture.   

Using a proprietary dictionary of 8000 words used to screen companies’ communication in their 10-K reports, they seek to capture a better and broader measure of the governance and accountability components of listed companies.  

Looking at the occurrence of each word in the 10-K reports grouped in different clusters, enables systematic assessment of the quality of Governance of the 500 companies that compose the index. 

From these metrics, a core governance measure is derived (stewardship score) through a proprietary quantitative model. 

The stewardship scores determine the quality of the governance of a company. 

The scores allow the extraction of fundamental corporate governance qualities and the overall DNA culture of the corporate. 

Well-governed companies tend to care more about their employees, be more prudent, more R&D focused, and ultimately to generate more shareholder value. 

These characteristics historically have been an important, sustainable, regular, and forward-looking source of outperformance. 

Monthly outperformance grouped by VIX level. The higher VIX levels have historically been observed to correlate with an increased chance of portfolio outperformance. Past performance may not be representative of future returns.