Cash. When ARTS Asset Management was launched, what were the reasons for developing a technical trading system and implementing it as the core of your funds?;

Willert The initial impetus was certainly my trading training at the IITM with Dr. Van Tharp in North Carolina. The results of his research have shown that the central common denominator of all successful traders is that they have a clear, comprehensible set of rules and adhere to them in an extremely disciplined manner. This meant that it was almost self-evident to go in the direction of quantitative trading. A discretionary manager can only guess which of his trading rules are really important for the success of an investment and which are not. A rather extreme example to illustrate this would be the following: If you follow the trading approach, for example, that on the first day of the month you buy the 30 most performant stocks of the last four weeks of the S&P 500 and hold them for one month, except for the first day of the month, but only in one leap year, falls on a Sunday, then you will probably achieve quite good results in the long term with this strategy, if you go through it in a disciplined manner, even though the second part of your trading system is absurd and counterproductive . However, since you do not know the performance attribution of the individual components, you cannot say exactly whether and to what extent which part of the trading system is responsible for the success. In the above example, it is of course quite obvious, but in a more complex trading approach with a variety of trade rules, it is no longer so intuitively plausible. The great advantage of a technical trading approach is, among other things, that each of its trading rules can be verified historically by means of a backtest. This also makes the trading approach comprehensible and verifiable. Many of our investors were pleasantly surprised how clear and transparent our system is - in comparison to a fund manager who makes his decisions "from the gut," which is in contrast a real "black box.;

Cash. What are the strengths of the total return concept and how does it work?;

Willert The greatest strength of our funds is certainly their high degree of flexibility. In the dynamic variant, for example, we can flexibly control the equity, bond and money market ratios between zero and one hundred percent. Running profits and limiting losses is the top priority. The objective of the trading approach is to always focus on those asset classes that currently perform best. Within the asset classes, funds are then selected which, compared to all the others, have the most stable trends in each case, since they have the highest mathematical probability of remaining among the top performers in the near future. In addition, each position is hedged with a stop-loss limit.;

Cash. Has there ever been a phase in which the markets have not sent out clear or misinterpreted signals and you have been forced to intervene manually?;

Willert No, there never was. In my opinion, a technical trading system must not leave room for discretionary decisions at any stage of the market, which would counteract the core idea of quantitative trading.;

Cash. In some interviews, you rightly said that buy-and-hold strategies are no longer up to date. How sensitive is your trading system or the other way around, how often are buy or sell orders placed?;

Willert The trading system is very active and has a comparatively high portfolio turnover rate, on average we turn all fund assets three to four times a year.;

Cash. Recently, there have been a lot of discussions about the possibility of rising interest rates in Europe as well. How is such an event and its consequences implemented into the trading system? Which implications do you expect?;

Willert We are facing a turning point in bond investments. In the past 35 years, buying and holding bonds has worked well. It was enough to buy government bonds with an AAA rating and a maturity of five or ten years. This meant that five, six or seven percent of the yield per year was possible. Those days are over. In the case of fixed-interest securities, good returns will only be achievable in the future with active management. Flexible investing without restrictions becomes even more important. An asset management approach will be the be-all and end-all on the road to reasonable returns. In total, however, bonds as an asset class remain indispensable. The future certainly belongs to asset management, which covers all bond investments. This also allows the development of currencies, maturities, short duration, inflation-linked securities or even convertible and corporate bonds to be used. In order to achieve lucrative returns, you have to play on the entire keyboard.;

Cash. What are your customers' current wishes?;

Willert A very important point for our clients is the reduction of the maximum drawdowns in comparison to classical index-linked investments. For most private investors, price setbacks of 50 percent or more, as we have experienced on the markets twice between 2000 and 2010, are significantly more than they are prepared to accept.;

Cash. The correlations of the asset classes have been purring ever more closely together for some time now. How does the trading system take this into account?;

Willert Looking at the correlations of individual asset classes over the course of history, we find that they are anything but stable and can fluctuate considerably, and that they can also turn into the opposite. Our trading approach has therefore been developed from the outset in such a way that it can cope with the constantly changing correlations and also completely detach itself from the development of individual indices. For example, the C-Quadrat ARTS Total Return Bond, has achieved a performance of plus 2.8 percent since the beginning of the year, while the global bond index Barclays Multiverse Unhedged Total Return had to give up minus 5.5 percent in the same period.;

Cash. If you analyse the market behaviour inrecent years, how large was the percentage of active and passive investments that made a positive contribution to your funds?;

Willert The share of passively managed target funds has risen steadily in our portfolios over the past few years, which is mainly due to the fact that ETF providers are bringing more and more specialised products onto the market, which is of course a great advantage for a trend-setting sector rotation approach such as the ARTS trading system. In addition, trading costs have also steadily improved, and most of the ETFs are now purchased for an agency commission in the single-digit basis point range. On average, it can be said that in the long term we already account for around one-third of the asset allocation with ETFs in our dynamic products, but the remainder is still made up of classic, actively managed investment funds.;

Cash. In which markets were active investments more effective, in which markets were passive investments successful? What are the reasons for this?;

Willert Just a few months ago, my founding partners, Markus Letschka and Jürgen Kultscher, by chance, carried out a small study based on our very extensive database, which comprises over 10,000 investment funds and more than 1,000 ETFs. In short, the following picture emerges: looking at different time windows such as three, five or ten years, there are sometimes enormous performance differences of several hundred percent between active and passive funds between the individual markets. In which market phases, however, active or passive products perform better, seems to follow no pattern at all. Neither the size of capitalisation, nor whether it is a developed or emerging market, whether the market is more or less liquid, whether the market is covered by many or few products, or whether it is a rather narrow or broad market segment, appears to be a reliable indicator in the long term of whether passive or active investment funds will perform better in terms of returns. Sometimes ETFs perform better in the same market for a certain period of time, then funds that are actively managed again. This speaks in favour of a flexible trading approach such as the ARTS trading system, which is able to fall back on the full range of active and passive funds and can thus benefit from the best of both worlds, depending on the market situation.;

Cash. Multi-asset funds continue to be among the products in greatest demand. And this despite the fact that not all portfolios have yet proven that they perform well over a longer period of time. Is there a risk of overtaxing the fund category?;

Willert Certainly, some products are currently sailing under the marketing flag of "Multi Asset", which only do justice to the designation to a very limited extent. Rigidly managed products with simple buy & hope strategies will certainly be driven by strong corrections in a market environment with rising correlations.;

Cash. One of your passions is motorsport. Are there any parallels between the requirements of racing and fund management?;

Willert Absolutely! Both in motorsport and fund management, it is a matter of achieving the best performance and in both cases it is objectively measurable. In motorsport, just as in fund management, computers have found their way into the world of motorsport, but they are already much more dominant there. There is no longer a major racing series down to karting, where telemetry data evaluation is not the key to success. The computer reveals every driving error, too soft braking, wrong line selection, going on the gas too late in the corner exit, everything.... That one could conceal bad lap times with bad excuses like in the past, is no longer possible. And in long-distance racing as well as in fund management, it is important to assess risk versus performance: If you want to finish first, you first have to finish.;

Cash. What does discipline mean to you personally and in the investment environment?;

Willert Discipline is THE key to success for me, in almost all areas of life. There is a fantastic book, which I can only recommend to read, titled "The Road to Excellence: The Acquisition of Expert Performance in the Arts and Sciences, Sports and Games". It is a summary of the work of the world's leading scientists on the subject of "excellence" in various fields such as sports, music and professional chess. In summary, the researchers come to the conclusion that something like “talent” does not exist. Talent would mean that someone would be able to achieve top performance neither without practicing or training nor “dedicated practice” – the targeted development of skills - as the researchers call it . But there was no indicatation of that ,that the book also clears up with the typical myths of "Wunderkinder" like W. A. Mozart. The success of all top performers is the result of hard work. Each top performer has invested at least 10,000 hours of blood, sweat and tears in his or her individual field to get his or her abilities, "experts are always made, not born".;

Cash. Which market development do you expect by the end of the year and beyond?;

Willert We do not have an anticipatory element in our trade approach, according to the motto: "a trend follower who has a market opinion is no one.";