Resilience of Hope
By Saftar Sarwar, Chief Investment Officer, Binary Capital
October was a positive return month. Positivity on earnings data leading to share price appreciations in areas we focus on: technology, healthcare, and consumer growth. The future economic and business opportunities remain exceptional provided that policymakers continue to let capitalism and entrepreneurs focus on what is important: innovation, people and excellence.
In this note, I am going to write some comments about a crucial factor in investing, something that is typically ignored by many or cannot be properly undertaken due to ignorance or stress levels. Something we take very seriously. It is investment resilience.
To feel pain (stress) in portfolio and investment management is very evident in day-to-day investing. How does one cope with such excessive pain points and remain resilient, calm and focused on the investment strategies in place is a crucial skill and attribute that if handled correctly translates into investment performance.
Resilience is so important, that does not just come from recent experience and thinking. It comes from a place of experience, work and engagements across investment markets, cycles and trends. It comes from learnings and understanding from others more able as well as understanding and acknowledging yourself.
At Binary Capital for our overall portfolio management strategy, we embed resilience thinking very much into the process. High conviction investing naturally (usually) has to take on a higher level of volatility than broad indexation or general active portfolio management. This can lead to higher and persistently elevated stress levels.
For our investment philosophy, being able to be fully resilient when others are not or cannot be is a significant advantage and a material ‘investment edge’. It is a Binary Capital edge that we have absolutely relative to other DFMs and investment firms in the market. It is a significant value add for us and something that we have demonstrated time and time again not just in the actual investment philosophy but with our investment return numbers.
Many of our solutions recently, as well as data more long-term, sit comfortably in the top decile of their peer group performance tables – indeed many strategies are number one across the various risk profiles.
These results have come about from, over time, excellent asset allocation alongside investment selections – together with all this there has been excellent resilient portfolio management in the face of considerable volatility and market stress.
Our patient capital approach to investing, will result in a mindset that needs to be firm in our views, thinking and implementation, unless there is significant materiality to tell us otherwise. It is a forward-looking and often a radical approach to investing.
The future is uncertain so our understanding of the future and the opportunities within that needs to be of a high level of confidence (in as much as that can be possible)
As we come up to the end of the year our thoughts turn to investment and asset allocations for 2025. The challenge will be to improve on our exceptional return and risk management and build better and better, creating further investment edges.
To note the US has been a positive contributor to returns over the years. It is difficult, even with the higher investment valuations there, to position radically against that. There is real innovation happening and will continue to happen as corporates position for future growth in further technological advancements, especially incorporating artificial intelligence, data and non-human decision making.
On the other side of growth in Western markets is the opportunities in emerging and frontier markets. Such countries continue to adapt to economic growth, a growing middle class and innovation from a dynamic younger well-educated population. As countries diversify away from commodities – these are interesting areas of growth, trends and investment opportunities.
As always, we invest with cautious and optimism with a focus not on quarters but years. The delivery is in the results: performance and risk management. The opportunity to remain persistent to this focus is the key goal for us, be resilient, so that we continue to deliver consistency in investment excellence.
