22/03/2020 - Investment Themes: Absolute Return

Investment-Themes-Absolute-Return

A perfect fit

DJE's absolute return concept: adequate return with the least possible fluctuations.

DJE is a popular partner for institutional clients who do not expect an off-the-peg product but a tailor-made solution. Despite all the differences in objectives, investment guidelines and risk budget, the vast majority of the institutional mandates managed by DJE have one thing in common: they are portfolios with absolute return character. These strategies are flexible in the selection of their asset classes, they strive for a positive return in every market phase independent of indexes - and they are always individually structured according to the client's wishes.

Focus on bonds
"We can score with multi-asset strategies because our mandates are generally characterised by low volatility, they usually also focus on bonds and we are strong with our bond funds. And not only now, but also over longer periods of time", says Dr. Kaffarnik, as Member of the Management Board of DJE Kapital AG responsible for fund management and trading, including above all the absolute return special fund mandates for institutional clients. And Richard Schmidt, Head of Absolute Return, adds: "Multi-asset funds can be combined with value protection concepts. In the process, shares and other risky positions in DJE are gradually reduced as soon as the performance falls below previously defined targets. In addition, our multi-asset portfolios are robustly structured, as a high proportion of positions that are negatively correlated with equities, such as Pfandbriefe or German government bonds, are included. They provide a counterweight to the equity component."

Broader investment universe for better diversification effects
At the beginning of an absolute return mandate, there is always the specification of the income and risk budget, which should not be exceeded if possible. The combination of both, expected return and risk appetite, sets the fundamental course for the strategy and strategic allocation of the asset classes: Equities, bonds, money market, precious metals (represented 1:1 by certificates), currencies and exclusively stock market-oriented derivatives. As a rule, an absolute return mandate from DJE is characterised by an above-average dividend yield and a lower beta compared to the risk benchmark. It is also widely spread across the various asset classes and is highly liquid. Individual stocks and bonds usually account for less than three percent of the special fund assets - and never more than five percent. Due to its flexibility, however, portfolio management is also able to take into account the most diverse investment guidelines.

The combination is decisive
The tactical allocation of the portfolio is quickly adapted to market conditions within the guidelines. Ideally, this is intended to identify and avoid any risks in advance and to make the best possible use of existing sources of income such as interest income, dividends, share price gains, option premiums and currency gains. There are no automatisms here, but rather active management of the portfolios adapted to the respective strategy through individual stock selection, currency control and the use of futures and index options based on the in-house FMM method. Thanks to this three-dimensional investment philosophy, which takes into account fundamental, monetary and market-related factors, regions, countries, sectors and individual securities are valued and weighted independently of their respective index components. The experienced DJE portfolio management team uses the signals from the FMM method and positions the absolute return mandates procyclically in order to follow a strong positive trend, or countercyclically because it has recognised that the signs are changing. The flexible combination of all elements and the precise focus on the investor's investment objective ultimately determines the investment success.

 

 

Note: All information published is for your information only and does not constitute investment advice or other recommendation. Long-term experience and awards do not guarantee investment success. Securities are subject to market-related price fluctuations which may not be compensated for by the active management of the asset manager or investment advisor. This information cannot replace a consultation. All information has been provided with care and to the best of our knowledge at the time of preparation. Despite all due care, the data may have changed in the meantime. Further information on opportunities and risks can be found on the website www.dje.de. The sales prospectus and further information are available free of charge in German from DJE Investment S.A. or at www.dje.de The fund management company is DJE Investment S.A. DJE Kapital AG is the distribution agent.