Absolute Return

Most of the people judge an investment product solely by it's historic returns.
Once we decide to invest money, we expose ourselves to a certain risk framework. Mitigating this risk is a business on it's own and most of the Asset Managers don't pay much attention on this part.

I'm not suggesting that Asset Manager are ignoring the risk but I would argue that they just have inappropriate risk management in place and therefore expose their clients to a risk, they never actively manage.

When we consider a systematic trading approach vs. a passive ETF strategy (Buy & Hold) we need to bear in mind that the number of days we are in the market are lower with the systematic approach, therefore we are not exposed to market risk and might still get a decent return at the end, with the same underlying secutirty but with less downside potential. 

So, if you compare to Buy & Hold have a look at the risk profile during the holding period.




 

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