Today we understand we need to generate the income and returns required to meet our investors’ spending needs and liabilities. Bonds cannot offer such returns and the stock market is often unreliable. Our way to address this is by following a volatility strategy, which is a return engine that does not rely on interest rates, dividends, coupons, or price appreciation to perform well. Our philosophy is to deliver consistent risk-adjusted returns, uncorrelated to traditional asset classes.
We find that applying the volatility strategy results in a number of fairly unique performance characteristics. We do not rely on carry or yield, nor consistently sell optionality to enhance results. We structure the portfolio so as to complement a traditional portfolio of equities and bonds. The volatility strategy trades only in liquid, transparently priced and operationally simple instruments.