"Measure what you manage" is indeed a wise advice - but often what gets measured and therefore managed has a poor alignment with the full complexity of asset owners' objectives. Benchmarks defined strictly by return are typically the easiest way for managers and asset owners alike to measure their success against whilst objectives related to liquidity, downside risk, yield and so on are not factored in. These other objectives tend to take a back seat because quite simply, they are harder to measure and are often specific to individual contexts.
The word 'solution' is terribly overused and misused in the industry today. However, here at NSM, when we suggest and provide "solutions", we always assume that our clients' objectives are more complex than benchmark-centric investment products reflect and hence strive to close that gap by providing strategies that address the more varied and complex objectives that investors usually hold. We aim to provide solutions that maintain meaning and bridge this gap between what asset owners really need and what they are getting in return.
Many so-called alternative investments can often exhibit much of the same characteristics as a traditional portfolio, particularly during periods of market crises. Therefore, it is important for investors to consider other non-correlated sources of risk in a portfolio that can provide true diversification. NSM's Diversified Return Solutions seek to provide long-term positive returns regardless of market direction and are designed to be truly uncorrelated to an investor's portfolio by not simply providing an "excess return".
Capital growth is an important component of any asset allocation framework and there are several ways in which investors can improve upon the growth engine using alternative strategies that offer additional diversification. NSM's Return Seeking Solutions aim to capture the anticipated returns from global growth, but with less downside risk and a more consistent return profile using differentiated approaches. These solutions are generally long-biased and designed to deliver attractive risk-adjusted returns while allowing some correlation to traditional portfolios.
Understanding the nuances of risk is critical to being able to achieve maximum return on an investment while avoiding uncompensated risks that often have a counter effect to an investor's overall objectives. Whether it involves risk in the form of unintended currency exposure, rapid market decline or economic factors such as inflationary pressure, NSM seeks to understand every aspect possible to minimise its impact on our clients. NSM utilises various tools which are designed to safeguard against unwanted risks in our clients' portfolio while simultaneously targeting value-added capital appreciation.