He says that the standard deviation for returns has been a bit over 4 for the 500 fund and a little over 5 for the 700 fund. He compares that with an intermediate-term bond fund with a standard deviation of about 3 for the same period.
"The fact that we're taking 5% risk and making a 7% return, that's a pretty good combination," he says. "A 7% return is quite high in real terms in an environment of low inflation like we've had, and to get that without putting a lot of your capital at risk, those are the characteristics we're trying to deliver in these funds.
"I call it diversifying by philosophy," Knight says of absolute return. "Another way to add some diversification to your portfolio is to combine relative strategies with absolute return strategies."