SOUNDS OF SILENCE
Chief Investment Officer
Business Development & Marketing
‘Why are you so petrified of silence? Here can you handle this?
... Did you think about your bills, you ex, your deadlines Or when you think you're going to die? Or did you long for the next distraction?’
~ All I Really Want, by Alanis Morrissette
Knowledge is a double-edged sword. As Einstein said, information is not knowledge, and it would appear that the most challenging aspect of knowledge is keeping it quiet long enough to be able to hear what needs to be heard.
Modern technology means that there is no shortage of information and opinions available constantly; you can always find data to support your current theory, mindset, or mood. One could also reasonably assume that there couldn’t be/shouldn’t be a lonely person in the world, with all the views, thoughts and tweets connecting people.
Yet loneliness, anxiety and depression prevail, and if anything, appear to be becoming a serious social concern. Carl Jung said, “Loneliness does not come from having no people about one, but from being unable to communicate the things that seem important to oneself, or from holding certain views which others find inadmissible.” It is easy to find yourself in this kind of position in financial markets.
Does that mean we’re talking too much, not listening enough, or simply that we are not talking about the right things?
Amidst this frenetic activity the words of Alanis Morrissette are worth considering: can we handle silence … or do we merely long for the ‘next distraction’?
Technology has also created the opportunity to drill down to the granular detail on everything – but how far is far enough? And once you’ve reached bedrock, what should you do then…if anything…? Graham and Dodd refer to the inability to differentiate between infinite detail and adequate detail and state the following:
“… it is quite possible to decide by inspection that a woman is old enough to vote without knowing her age, or that a man is heavier than he should be without knowing his exact weight.” Security Analysis, 1934 Edition, Benjamin Graham and David Dodd.
Gryphon’s Prudential and Flexible Funds attracted a great deal of attention amidst the noise of the severe market correction in March 2020. Investors were intrigued at the stability and wealth preservation capability of the funds. (The only difference in the way that these two funds are managed is the equity exposure of the Prudential Fund is restricted to 75% as the fund is Regulation 28 compliant.) Both funds were top, or close to top, in their respective categories over every time period and so the harsh reality looming was that the only way to go from there is down…
The over-arching purpose of the funds is capital preservation; that means sometimes sitting alone in an isolated space, saving sanity while peers bounce about like shot cats.
And so came the stark reality check with our debut into the July 2020 Corion Report. We had waited patiently for the Gryphon Prudential Fund to reach the qualifying fund size needed to be included in this survey… and thus our inauguration looked like this:
Top performing fund over a year and (pretty much) bottom over a month!...the bold and beautiful!
The easy assumption to make is that the fund is highly volatile and should be viewed with a jaundiced eye; but the exact opposite is in fact true. The fund still holds no equity at all, only cash (local and sometimes offshore) and bonds. With the market having run as it did over the last month or so, our equity-exposed peers rallied and thus on a relative basis, Gryphon’s short-term performance appears to lag.
This perspective inspired us to reflect on the volatility profile of the fund, and how this speaks to the performance/capital preservation over a period of time.
The graph below is the rolling 36 month performance of the ASISA multi asset-high equity category. The blue shaded area shows the best performing fund, the orange shaded area shows the worst performing fund, and the purple line shows the Gryphon Prudential Fund’s performance.
This illustration clearly demonstrates the vast differential between the best and the worst performing funds in the same category, as well as the consistent, stable delivery of the Gryphon Prudential Fund which results in stellar performance, with limited NAV volatility.
This is a very useful profile of what to expect from the Gryphon multi asset funds. Their commitment to preserving capital results in a very different journey – sometimes more sedate than their peers, sometimes distinctly contrarian…but the ability and willingness to stand back from the noise and hold a client’s investment securely away from volatility and damage is rewarded over time.