Investment Objective
 
613 Capital’s investment objective is to generate superior, long-term, risk adjusted returns (capital and income) for our investors, reducing market volatility and downside risk, irrespective of the underlying market direction. 
 
Investment Philosophy
 
Background
The investment industry food-chain contains many inherent inconsistencies when compared to an investor’s primary objective of absolute returns.  Management of companies are often short-term focused, having to deal with quarterly result announcements as well as their own personal needs such as bonuses, options, and perks.  Stockbroker recommendations are inherently poor as conflicts of interest exist between investors and the need for the firm to maintain a positive investment banking relationship with the companies they research.  Fund managers are primarily concerned with earning fees through asset gathering, focusing on relative performance, and rewarding losses which are less than their competitors and/or benchmark.  Investment advisors are often better salespeople than much needed risk managers, relying on false beliefs of ‘long-term’ investing in equities and the hope that the markets always rise.  The poor investors paradoxically sit at the bottom of this pyramid, seeking to earn a better return than if they had invested their money in the bank. 
 
Furthermore, studies in Behavioral Finance have shown that investors are driven by two primary emotions, greed and fear.  While in everyday life these emotional traits have a positive consequence, in investing they often lead to disastrous outcomes.  Greed often drives investors to underestimate risk and leads to investment decisions being made after material gains have already occurred.  The need to keep up financially and potentially egotistically with their colleagues and friends tends to fuel this behavior.  Paradoxically, while investors tend to take on more risk than is appropriate, they have a very low tolerance for loss.  This negative emotional response leads to investor irrationality, often resulting in selling at market bottoms after material losses have been incurred.  This behavior of buying high and selling low leads to overall investment returns being substantially worse than the average return of 10% p.a. that would ‘normally’ be expected through time.
 
Philosophy
 
613 Capital acknowledges the abovementioned issues, and will seek to guard investors from their natural, emotional ‘roller-coaster’ by utilizing a process that reduces downside risk. 613 Capital believes that through skill, having the ability to short poor companies, using derivatives to manage downside risk, and focusing  on investing in quality companies, that it is possible to deliver returns* in excess of the long term average.  Notwithstanding this, 613 Capital acknowledges that the relationship between risk and return is not a 1:1 relationship but rather that for each additonal 1% return sought, the level of risk goes by a greater amount.  It is with this in mind that 613 Capital will seek reasonable levels of return while focusing on managing downside risk.
 
613 Capital’s philosophy focuses on the preservation* of capital and downside risk management which is fundamental to wealth creation.  This is prefaced by a strong belief in the fact that 'risk is what you buy, return is what you get' and that risk should be viewed in absolute* terms rather than relative terms.  This view of risk ensures a stronger alignment between 613 Capital and the needs and expectations of its investors with respect to positive* returns.
 
 
*This product involves risk, where the possibility of capital loss exists.  Performance is not guaranteed. Investors should seek financial advice before investing in the Fund.