At Knightsbridge we define risk as the permanent dilution of capital, not volatility. We also firmly believe that superior returns during good market conditions are not a measure of a manager’s performance or skill. Generating quality investment return in difficult market conditions is a more appropriate measure of manager and portfolio performance.
In turn, benchmarking against an artificial investment parameter such as share market indices is not meaningful. Absolute positive investment returns are the key to quality investment performance.
There is also a fine balance between generating strong investment returns and volatility. Extreme investment volatility can clearly have a significant negative impact on asset values. At Knightsbridge we develop investment strategies around minimising volatility through establishing a strong cash flow process and a tailored asset allocation to suit your specific tolerance.
Invariably at times in the investment cycle, when markets are highly volatile, it may be appropriate to adopt a very defensive asset allocation which consists predominantly of fixed interest securities and cash.