SPONSORED FEATURE: A low-volatility track record in tempestuous times

Amundi Funds Equity Europe Conservative draws on ten years’ experience to deliver equity growth and yields, without the typical equity market drawdown.

The last decade has been a testing time for equity investors. The global financial meltdown, the eurozone, the taper tantrum, China’s slowing growth – each crisis has been marked by increased volatility and significant downside. Investors who think equity growth must always come with a lot of risk should think again, says Melchior Dechelette, head of risk efficient solutions at Amundi Asset Management.

He heads a team with a solid low-volatility track record. In 2007, it launched an innovative strategy aimed at investing in a diversified selection of European stocks that collectively experience less volatility in stressful conditions than the wider equity market.

Amundi Funds Equity Europe Conservative follows a similar strategy. The Ucits fund allows investors to participate in the potential upside of European equities, with probably less downside, aiming to deliver index-beating total returns over a five-year horizon.

It launched in 2009, investing in quality stocks from a mid- and large-cap  universe.

“Unless they are deep value investors, every manager says they want high-quality stocks, but we really mean it. We set very specific conditions before any stock is considered,” says Dechelette.

The strategy’s results speak for themselves. Since the Greek crisis of 2010, annual maximum drawdowns for the MSCI Europe index have been in double digits. Equity Europe Conservative drawdown was less than the index’s fall in each case.

The strategy’s total calendar year returns were in line with or above the market in every year, bar one.

“Our low-volatility stocks are naturally defensive, but they can participate in rebounds, too. Our investors need not forsake returns for safety,” says Dechelette.

The pattern proves low volatility is compatible with growth, he thinks, as the strategy performs better than its benchmark in both strong and weak market cycles.

Equity Europe Conservative stocks tend to exhibit a higher profitability than their peers, plus a higher level of operating efficiency and a lower level of leverage. The portfolio’s managers look at metrics such as Return on Asset, EBIT (earnings before interest and payment) margins or Leverage ratio.

Stocks are also chosen for their diversification potential. The team tries to identify stocks that react as differently as possible from other stocks in the portfolio to market events, to ‘smooth the ride’, especially in turbulent markets. Overall, the portfolio of around 90 stocks has shown its ability to weather market drawdowns while fully participating in up markets: since its launch in April 2009, the annualised net performance has been 12.1% vs 10.6% for the MSCI Europe (as at April 30, 2016), with a lower level of volatility.

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Disclaimer: This promotional document contains information about sub-fund(s) of Amundi Funds, an undertaking for collective investment in transferable securities existing under Part IE of the Luxembourg law of 17 December 2010 (the “Product”). The Product has been authorized for public sale by the Commission de Surveillance du Secteur Financier in Luxembourg. Not all the Products and/or share class(es) of the Products will necessarily be registered or authorized for sale in all jurisdictions or be available to all investors. The Key Investor Information Document (KIID), the Product’s latest prospectus, its latest annual and semi-annual reports and its articles of incorporation (together the “Documentation”) may be obtained, free of charge, at the registered office of the Product or its manager and, where relevant depending on the concerned jurisdiction as further described below, of the duly authorized and agreed local representative, principal distributor or agent (the “Local Representative and Agent”). Subscriptions in the Products will only be accepted on the basis of the Documentation. Consideration should be given to whether the risks attached to an investment in the Product are suitable for prospective investors who should ensure that they fully understand the contents of this document. The value of, and any income from, an investment in the Product can decrease as well as increase. The Products does not have any guaranteed performance. Further, past performance is not a guarantee or a reliable indicator for current or future performance and returns. This document does not constitute an offer to buy nor a solicitation to sell in any country where it might be considered as unlawful, nor does it constitute public advertising or investment advice. The information contained in this document is deemed accurate as at the date mentioned in the text of the document. Data, opinions and estimates may be changed without notice. The Products mentioned in this document are not sponsored, promoted or endorsed by external Providers, including index providers. This material is solely for the attention of institutional, professional investors and distributors as defined in the Directive 2004/39/EC dated 21 April 2004 on markets in financial instruments (“MIFID”) and qualified investors and distributors within the meaning of the Swiss Laws and Circulars (CISA, CISO, FINMA’s Circular on distribution of collective investment schemes). It is not to be distributed to the general public, private customers or retail investors in any jurisdiction whatsoever nor to “US Persons”.List of Local Representatives and Agents: Paying and information agent (Zahl und Informationsstelle“) in Germany: Marcard, Stein & Co. AG, Ballindamm 36, 20095 Hamburg.  Representative in Switzerland: CACEIS (Switzerland) SA, 35 Route de Signy, CH-1260 Nyon, Suisse. Paying agent in Switzerland: Crédit Agricole (Suisse) SA, 4 quai Général-Guisan, CH-1204 Genève. The Centralizing agent for the Sicav in France is CACEIS Bank, 1-3 place Valhubert 75013 Paris.  The Principal Distributor for the Products in Spain is Amundi Iberia SA SGIIC Paseo de la Castellana 1, 28046 Madrid. Information provided by Amundi Asset Management, French joint stock company (“Société Anonyme”) with a registered capital of € 596 262 615 and approved by the French Securities Regulator (Autorité des Marchés Financiers-AMF) under number GP 04000036 as a portfolio management company, 90 boulevard Pasteur -75015 Paris-France – 437 574 452 RCS Paris – Dated 03/06/2016

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