The importance of independent management in a zero-interest rate world

7 May 2014

“Finance is not and should not be a leading player. Finance has an indispensable duty to support the management of capital and guide it towards productive activities, but the leading players are the wealth creators, not us. We must have certain fundamental characteristics to better do our job and the most important of these is an independent ownership structure. This leads to a long series of consequences that differentiate sound and useful finance from the distorted, pathological finance that we have often seen in the past few years”.

This is what Paolo Basilico had to say during a recent meeting held to discuss a matter of great interest, the nature of finance, which Guido Maria Brera, Head of Asset Management at Kairos Partners, discussed in a totally unique way. Capitalism, Communism, Neo-Liberalism, a welfare state model guaranteed by banks rather than the State, which is now stumbling: these are only a few of the ideas supporting Brera’s reasoning that finance has stepped up to fill the political vacuum of recent years.

“Considering the complexity of the current situation, there is such a vast panorama in which to invest that we need an accurate picture in order to make coherent, knowledgeable decisions”. Brera explained that, “Given its organizational system, 15 years of experience since inception and ongoing focus on attracting top talent, Kairos offers unparalleled investment products and, what is more, its excellence is 100% Italian”.

Federico Riggio, a member of the Kairos management team, went on to describe a few Kairos products, focusing specifically “on three products designed to respond to the lack of returns that is increasingly characterizing the market. In particular, KIS KEY, KIS Selection and KIS Italia are three products based on the same concept but focusing on different investment themes”. Indeed, KIS KEY invests exclusively in regulated businesses offering high dividend yields. This is the ideal solution for investors deep in bonds intending to move towards equities. Launched less than one year ago, it has achieved a performance of 37%, overshooting its target of 8-12%. On the other hand, KIS Selection mainly invests in companies that are leaders in their respective industries, with a target of 6-8% to be reached in all market scenarios, and it boasts extremely contained average volatility.

“Then there is KIS Italia,” noted Riggio. “For a firm like Kairos, which can be uncorrelated to benchmarks and is itself Italian, KIS Italia is a great opportunity, as Kairos enjoys in-depth familiarity with the market. We also aim to leverage overall market inefficiency”.

These are three tangible answers to the needs of investors who, like Kairos partners, see finance as an opportunity rather than an end in itself.