Introduction to Absolute Return Investing

LIKE ANY OTHER DISCRETIONARY MANAGER, WE MANAGE PORTFOLIOS WITH THE AIM OF MATCHING CLIENT INVESTMENT OBJECTIVES WITH THEIR APPETITE AND TOLERANCE FOR RISK.

HOW SHOULD THE SUCCESS OF AN INVESTMENT STRATEGY BE MEASURED?
Rising stock markets has led to the perceived wisdom that success was relative to markets – that is if the FTSE100 (or any other appropriate benchmark) went up by 10%, then a successful strategy must rise by more than 10%. This seems intuitively sound until you consider that stock markets do not always rise, and of course we have seen several recent years where this has been the case.

In a bear market, is it still reasonable to regard a strategy which produces a loss, (albeit a lower loss than the benchmark) as successful? High volatility in recent years has demonstrated that the traditional approach to investment management has failed to meet the challenges of variable market conditions. Risk averse investors want to see better protection of their capital allied to the potential for growth. This demand has resulted in a growing recognition of absolute benchmarks which target positive returns in all market circumstances.

ARIA Capital Management seeks solutions that offer better protection of capital combined with growth potential and which use an absolute benchmark of positive returns to measure success – a concept that is considerably more intuitive to most investors than relative out performance of a stock market that could be falling.

RECOGNISING HISTORICAL REALITIES
We endeavour to retain the flexibility to ride out these storms through dynamic asset allocation across a broad spectrum of investments, avoiding exposure to investing climates that seem less than favourable. To recognise historical realities, means not to wed yourself simply to traditional investments or asset allocations.

As ‘Absolute Return’ Managers, our primary goal is to generate attractive risk-adjusted returns over the long-term and to protect investment capital at all times, especially in uncertain market environments, with controlled volatility and lower correlation in relation to the financial markets. We do this through investing in a wider range of investments and strategies which help limit the volatility experienced and reduce correlation with mainstream financial markets. We endeavour to deliver positive, absolute returns over an entire market cycle.