Flawless Design + Precision of Execution = Consistently High Performance

In investing, as in high-performance vehicles, one number often captures the eye: for a car, it’s top speed; for an investment fund, it might be total return. At first glance, both numbers appear to showcase potential—one for speed, the other for profitability. But as they say, “the devil is in the detail.” Without understanding what goes on behind the scenes, these single figures can mislead, masking the true level of risk. Is a vehicle that can reach 350 kilometres per hour inherently riskier than one that tops out at 150? The answer, of course, depends on far more than speed alone.

The same can be said for investment funds. With cars, reaching high speeds safely requires a high-performance braking system, precision engineering, and a skilled driver. In investment funds, consistently achieving high returns safely relies on rigorous checks and balances, a disciplined approach, and well-established governance. Consistency in performance is a key indicator of an investment manager’s ability to evaluate and manage risk. High speeds or high returns might grab attention, but achieving them with regularity and control speaks volumes about underlying quality and safety.

1) Consistency, Controls, and Accountability
Just as a high-speed car built with low-cost materials and poor braking systems, driven by an unskilled driver, represents an elevated risk, a high-return fund without a robust risk-management structure is a similar gamble. A fund managed by a team with experience, accountability measures, and strict governance is built for long-term performance, not just one-off successes.

Take, for example, a private debt fund managed by a highly experienced fund manager with over a century of corporate history, backed by extensive governance frameworks. Such a fund may incorporate independent credit committees, custodians, and trustees who ensure accountability at every level. These checks and balances are the backbone of any investment’s safety, transforming a high-yielding investment from a speculative venture into a measured, disciplined vehicle for returns. When these layers of oversight are combined with high standards for loan underwriting and senior secured debt, the perceived risk in the return figure becomes far lower than in a fund without such structures.

2) Stability Through Secured Investments
In private debt, especially in funds with senior secured debt backed by underlying residential assets in metropolitan areas, the risk is often further mitigated by the stability and growth potential of these assets. Residential properties in low-volatility areas with sustained demand offer a layer of security that can’t be quantified in a single return figure. High returns with assets like these aren’t simply a high-risk, high-reward bet; they’re the result of careful selection and comprehensive planning, underpinned by solid collateral that can withstand market fluctuations.

3) Rethinking Risk in Private Debt
Ultimately, just as driving at extreme speeds isn’t inherently risky if done within the bounds of a highly engineered, well-tested vehicle with an experienced driver, high returns in private debt don’t automatically indicate higher risk. Taken in context, a fund with thorough governance and asset security is often a safer investment than one with a lower return but fewer protections.

The takeaway? A single number, whether it’s top speed or total return, doesn’t reveal the full story. Both cars and funds can be designed for high performance with controls that reduce risk. In private debt, a fund’s risk profile depends not just on the yield but on the expertise and oversight that guide it—resulting in an investment that, like a race car with proven engineering, performs consistently over time.

George Gadallah
Chief Executive

This opinion piece is written by George Gadallah, Chief Executive and Co-Founder of Princeton Financial Services. With a Bachelor’s Degree in Economics, a Masters in Finance, and over 28 years of experience in Banking & Finance, George brings deep industry insight to his analysis.

In 2012, George co-founded Princeton Financial Services and the Princeton Fund Series alongside Craig Anderson. As Princeton’s Responsible Manager under its Australian Financial Services Licence, he oversees the strategic management and direction of the Princeton Group.

Before founding the Princeton Group, George held senior management roles at ANZ and St. George Bank (SGB) from 1995 to 2011. Between 2008 and 2011, he served as Executive Manager and Head of Property Finance CBD at SGB, where he led a team focused on prudent risk and credit management, achieving strong performance under his leadership. George’s extensive experience and commitment to risk management continue to guide Princeton’s responsible growth in the financial sector.