Pearl embraces volatility not only as an asset class but also as a preeminent tool to achieve investment objectives.
Investment practitioners have long considered volatility as a bi-product of performance and not as a return driver unto itself. Historically, when volatility has been viewed as its own asset class, it has been cast in a negative light, mainly due to the way volatility has been traded.
Over the last 15 years many volatility-based products have been introduced to the marketplace, most notably VIX Futures, and new innovative ways of trading volatility are now possible. Pearl Capital has long been an advocate of the volatility asset class and sees a new medium through which investment objectives may be achieved in ways not previously possible. Pearl Capital has been a key pioneer leading the way on this exciting new front of investment thought and practice.
Pearl Capital regards volatility as an essential performance driver rather than a force of destruction and should be a core part of all portfolio composition. Due to the convex nature of volatility when markets panic, volatility is the “anti-bubble”. More than any other instrument, volatility exhibits strong, consistent, and powerful non-correlating counterbalances and consistently shows it can be relied upon to counteract negative forces of destruction wrought about through panic and fear in markets.
While other asset classes are tied to interest rates, currency movements, earnings, and innovation, volatility encapsulates the collective fear, greed, and complacency of market participants. These expectation-driven dynamics are the basis for investment solutions and change the rules of investing for institutions and investors. Volatility has become the powerful heart and soul of all our investments solutions at Pearl Capital Advisors. Volatility is what we embrace.