The essence of the absolute return investment strategy is to achieve inflation-beating returns at reduced levels of volatility. Tactical and dynamic asset allocation is combined with explicit downside protection on our local equity component, using derivatives and other risk protection strategies to achieve the required real return target. A high priority is given to minimising capital losses.

Financial advisers have to meet challenging goals – above all, achieve the highest possible rate of return for their clients while limiting downside risk and volatility of returns. Yet in the current climate of increased volatility and lowered return expectations across asset classes, reaching that objective has become increasingly difficult.

Following a pragmatic value-based investment philosophy, we look at relative valuations across all asset classes to support our dynamic asset allocation decisions. Our bottom-up driven equity valuations in particular are key to determining the magnitude and timing of the protective structures we put in place. To ensure maximum certainty in outcomes, we use these fundamental equity valuations in combination with derivative overlays to put explicit downside protection in place. This combination of derivatives with a fundamental valuation underpin acts as a protective structure (or hedge) against equity market falls, aiming to achieve the highest possible rate of return (per unit of risk taken), while minimising the risk of capital losses.

We operate dynamically across all asset classes, both local and offshore, including equities, nominal bonds, inflation-linked bonds, cash, listed property and derivatives, to adapt to relative market valuations.

An asymmetric return profile is, at its most simplistic level, higher and more positive returns, lower and fewer negative returns – achieved through active risk management.  Asymmetric returns means a return profile that is actively managed to meet the end investors’ risk preferences more efficiently.  Besides reducing volatility in returns, asymmetric returns are designed to preserve capital and offer downside protection.

They smooth your return profile. Asymmetric returns are also useful in that they limit the likelihood of irrational investor behavior (selling low and buying high) by creating a smoother return experience.