Amid uncertainty and intermittent shocks, advisors and asset managers need strategies to smooth and improve performance as investors are expressing increased concerns about the possibility of volatile returns.

Investment professionals are increasingly required to quickly make sense of events shaping investment outcomes and act promptly, and this is where hedge funds are coming into their own.

As I pointed out at the Money Maestros Workshop, I recently spoke at, a platform for advisors which explores the intersection of technical expertise and human behaviour in investing, traditional performance conversations with investors focus on annualised return, benchmark outperformance, peer rankings and fees. But what they often ignore is how volatile the path was, how much capital was lost along the way, and whether investors could realistically stay invested.

Investors, in practice, don’t experience annualised numbers – they experience drawdowns, recovery periods, and behavioural stress. They seek specific outcomes tied to a time horizon (such as CPI+5% over 5 years), and some view risk as volatility and drawdowns. Market fluctuations may lead to investment behaviour that results in a “behaviour tax”.

Their investment journeys are significantly influenced by:

• Advisors, who design solutions to meet their clients’ goals, viewing risk as failing to achieve these goals and guiding clients' emotions to stay aligned with their goals, and;

• Asset managers who seek capital appreciation, mostly by taking long positions exposed to market cycles. They define risk as permanent capital loss and are exposed to market swings and rigid mandates. They have limited tools to help manage behaviour.