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General TradingV

Volatility Targeting

A portfolio management strategy that dynamically adjusts position sizes or leverage to maintain a target level of portfolio volatility over time. When realised or expected volatility rises above the target, the strategy reduces exposure; when volatility falls below the target, it increases exposure. Volatility targeting aims to deliver more consistent risk-adjusted returns by preventing the portfolio from becoming overly exposed during turbulent markets or under-invested during calm periods.

Example

The fund's volatility targeting framework reduced equity exposure from 100% to 60% after the VIX climbed above 25, automatically de-risking the portfolio to maintain its 10% annualised volatility target.