Optimize return potential with regards to levels of absolute risk
Created in 2010, Seeyond's strategy is aims at minimizing the overall volatility of an equity portfolio with the objective to outperform the reference equity market over the long term. This active portfolio management approach consists in selecting stocks based on their risk profiles.
By approaching equity markets through the prism of risk rather than company fundamentals (a method specific to more traditional approaches), the management team first seeks to eliminate behavioral biases that can influence management decisions (overconfidence, herd mentality, lotteries, greed, etc.) but also biases caused by management with benchmark-related constraints (known as "benchmarked management.")
This risk-based portfolio construction then aims to achieve efficient diversification in the behavior of the securities within the portfolio and thus reduce the absolute risk of the portfolio. The management team thus opted to to apply a pure Minimum Volatility approach without any bias in terms of sectors, countries or market capitalization sizes.
An objective of superior risk- adjusted returns over the long term with integrated risk management throughout the investment process
A pure equity investment solution with no use of any other financial instruments, aiming to achieve greater risk minimization
Continuous risk monitoring and an original approach to portfolio rebalancing to obtain an optimalportfolio over time
The Minimum Volatility strategy seeks to build a diversified portfolio of securities demonstrating low volatility and low correlations to each other. The portfolio constituents result from security selection from a risk angle.. The management team applies minimum investment constraints (sectors, countries, market capitalization) , enabling full deployment of this strategy. It is also a pure solution investing solely in equities and no use of derivatives or cash to meet investment objectives.
To outperform the equity market benchmark over the long term while minimizing overall portfolio volatility.
To offer an asymmetrical risk/return profile: participate in a growth dynamic and reduce market downturns.
Main risks: capital loss, equity market risk (including small and medium caps), currency risk, remerging markets’ risk, geographic and portfolio concentration, discretionary management
Seeyond's Minimum Volatility strategy was created in 2010 by Nicolas Just, CFA, Managing Director and Chief Investment Officer, and Juan Sebastian Caicedo, CFA. They have also developed the management tools specific to this strategy, and today they manage the entire range of Minimum Volatility products developed over different investment universes and management specifications.