07 August 2013
Focus on SEEYOND FLEXIBLE MT
In a persistently unstable environment, Seeyond Flexible MT offers an active and integrated approach to risk management in order to offset the impact of market downturns and exploit specific investment opportunities.
Q&A with fund manager Frank Trividic,
head of flexible beta and volatility
Seeyond, Natixis AM’s volatility management and structured product investment division.
Why choose a flexible fund in today’s markets?
We have entered a transition phase after the peaks of the credit and sovereign debt crisis.
Risk aversion is decreasing, market visibility is improving and equities are becoming attractive once again.
While it is interesting to set up exposure to these markets, caution is still in order. There could be more ups and downs out to the end of the year and a flexible and nimble management approach is all the more judicious.
What makes Seeyond Flexible MT different from its competitors?
Over a recommended investment horizon of 3 years, our fund seeks to select the best allocation strategies in a multi-asset class (equities, bonds, currencies, etc.) and global investment universe.
With flexible exposure to equities (0 to 50%), Seeyond Flexible MT combines the use of objective and systematic indicators with a conviction-driven management.
- The goal is to generate regular, positive and robust performance
We seek to generate regular and robust performance rather than maximise it at all costs. Our fund therefore has an attractive risk/reward profile and was notably given a Globes de la Gestion award by Gestion de Fortune magazine: 1st prize in the “Flexible” fund category over 5 years.
- Investment models complemented by discretionary tactical analysis
We are extremely rigorous in analysing and managing the positions held in the portfolio. Our strategic allocation decisions are based mainly on quantitative models integrating objective indicators. We use these tools to test our methodology before investing, enabling us to avoid going “against the markets” for an extended period.
The tactical component of our investment approach serves two purposes: further optimising diversification in our portfolio and enabling short-term steering of the directional bias expressed in the models.
- An original allocation approach
For our allocation, we use a bottom-up approach modelled market by market. Unlike with a traditional allocation, our exposure to each asset class (equities, bonds, etc.) is the sum of our exposures by geographical zone in these markets.
We have also adopted a pure allocation: there is no stock selection bias in the fund.
For instance, if our models indicate that the US equity markets are buoyant and our qualitative opinions concur, we buy the stocks in the index. We do this via liquid instruments in order to preserve as much flexibility as possible.
Why is your risk management truly original?
Within Seeyond Flexible MT, our risk approach is applied at 4 levels:
1. A truly flexible allocation
We only buy liquid instruments, transparent, inexpensive and that can therefore be traded in real time. Our allocation choices can be implemented at any given moment.
2. Integrating risk upstream of the portfolio construction
Our investment decisions follow a 2-stage process revolving around 2 core questions: “in which markets should we invest?”, then “how much should we buy or sell?” To answer these questions, we integrate risk dynamically upstream in our models and then in the final portfolio.
3. Not going against the markets
By construction, the models we use enable us to avoid setting up positions against the markets for too long a period. We follow trends closely. While this approach can temporarily result in reducing the potential performance, it is primarily an efficient tool to control the portfolio’s overall risk level.
4. Offering an active approach to diversification
The widespread idea that passive diversification reduces risk is no longer tenable. As we have seen, markets tend to re-correlate at times of crisis. We believe diversification should be active and considered not as a risk control tool, but as a performance optimisation tool. If we expect a stress phase, we therefore refocus the portfolio on the markets offering the best visibility.
* Any reference to ranking, rating or prize of a fund is not a reliable indicator of future performance.
Seeyond Flexible MT is mainly exposed to the following risks: capital loss risk, discretionary management risk, equity risk (up to 50%), risk associated with investing in convertible bonds, risk linked to exposure to emerging markets, interest rate risk, credit risk, foreign exchange risk, counterparty risk and the risk of overexposure.
Seeyond is a brand of Natixis Asset Management, S.A. (limited liability company) with share capital of €50,434,604.76 - RCS Paris no.329 450 738 – Regulated by AMF: GP 90-009.