DJE - Equity Market Neutral Europe

DJE – Equity Market Neutral Europe

Active selection: The basic idea of the DJE – Equity Market Neutral Europe, launched in December 2017, is the conviction that an active selection of individual shares is superior to a broad share index in the long term and able to generate significant added value. An example from the healthcare sector shows how significant the gap between the best and worst stocks in a sector can be: In 2016, the best single stock gained 58% while the worst lost -36.3%. The picture is similar in 2017, a good year for the stock market, when the difference was -27.3% and +85.9%.* Since all shares are represented in the broad share index, the performance is highly relative.

Concentrated portfolio: The basic portfolio is the performance engine of the DJE - Equity Market Neutral Europe. Fund managers Florian Bohnet and Kilian Stemberger select only 50 individual securities without having any index targets nor requirements. As a result of this concentration, each individual security has a correspondingly greater influence on performance than in the index. A research team of 15, including 11 bottom-up analysts, evaluate and recommend the shares on the basis of fundamental, monetary and technical market criteria.

Equal weighting of securities: The fund management weights the selected securities approximately equally and regularly adjusts the portfolio in order to restore the equilibrium of the securities. The aim is to limit the risk of the fund's sector weighting deviating from the broad European equity market to the selection of individual stocks.

Compliance with sustainability principles: In addition, the DJE - Equity Market Neutral Europe is guided by the ten principles of the UN Global Compact. Accordingly, no shares of companies are selected for the portfolio that demonstrably violate human rights, labour law, environmental protection or encourage corruption. This also largely reduces corporate risks. In order to apply this permanent sustainability filter DJE works together with the index provider MSCI.

Hedging of market and currency risks: The fund management regularly invests part of the fund assets in an index derivative on the broad STOXX Europe 600 share index. This develops positively when the broad European stock market slips and, conversely, falls when the index rises.

Without hedging the market risks, the fund would achieve a better result in strong market phases, but may fall with the market during weak market phases.

When selecting the listed derivative, particular importance was attached to sufficient liquidity and market depth. In addition, any currency risks between the Euro and other European currencies are hedged through forward exchange transactions. The net deviation risk of the fund is thus almost completely reduced to the selection of individual shares and the composition of the sectors. Even if there's no guarantee, this way the fund should be able to achieve a stable positive return on the European equity market without being overly affected by its possible fluctuations in value.

Risks: Equity funds are subject to the value fluctuations of the stock market. The fluctuations in value may be greater than the hedges used by the fund management. There is no guarantee of positive returns. There are currency risks from equity securities that are not denominated in Euro.

* Source: Thomson Reuters Datastream. Health sector fluctuation range of the STOXX Europe 600 index in 2016 and 2017. As of 18th December 2017

Fund profile

Institutional investors: DJE – Equity Market Neutral Europe XP (EUR)

Private investors: DJE – Equity Market Neutral Europe PA (EUR)