Funds with reduced volatility and positive for profitability in the year to end economic optimism

The strength in the economic recovery seems to have been left behind. We are now in a more mature phase of the cycle in which the maximum of economic optimism appears to have been reached.

However, there is a disparity by region, with a decrease in the growth momentum in China since the beginning of the year and downward revisions in the GDP of USA, while in Europe an acceleration is expected in the third quarter.

On the other hand, signs of inflation continue to rise, favored by supply restrictions and increased pent-up demand, which are still being felt as a result of the pandemic.

Although it is still argued that this inflation would be transitory, the uncertainty it is generating around fixed income issues could cause US Treasury bond yields to rise in the coming months.

The possibility that inflation could escalate beyond expectations and the effects that the delta variant of the virus may cause continue to be a cause for concern in the markets and could cause episodes of volatility in the coming months.

Multiactive Background

To protect themselves from this volatility, conservative investors can choose to transfer their assets to funds that, having a low level of volatility, nevertheless manage to maintain positive returns since the beginning of the year.

From this group of funds, DUNAS PRUDENT VALUE is the first that, enjoying a controlled volatility at one year of 0.28% – which places it among the best in its category for this concept, in the fifth quintile – obtains a positive return of 0.71% in the year and 1.41% in the last annual period.

Framing in the category VDOS of Alternatives Very Low Volatility, is a multi-asset and multi-strategy fund, with an absolute return philosophy, based on the proprietary investment process called VCAR (Value Cross Asset & Risk).

According to the VCAR, the management team, through macro analysis and top-down (from the markets for fixed income, equities, investment grade credit, high yield or currencies), on the one hand, and the fundamental analysis of the capital structure of the companies on the other, it seeks a high degree of flexibility in its management and the best combination of assets to achieve its profitability objective, which is set at Euribor 12m + 45 basis points net of commissions.

It also limits its ex-ante volatility to a maximum of 2% per year, always under the premise of preserving investors’ capital. It manages assets of 246 million euros, its largest positions corresponding to Telefónica Participaciones SAU (6.72%) V / Futuro C / P on Italian Bond (3.80%) TechnipFMC Plc 0.88% (3.24%) Banca Farmafactoring SPA 2% (3.04%) and Contract of Options on Euro Stoxx 50 (2.79%).

Fixed rent

Its participants bear a fixed fee of 0.25% and a deposit fee of 0.05%, as well as a variable fee of 9% on positive annual results of the Fund with respect to the EURIBOR at 12 months + 45 bp

From the Euro Short Term Fixed Income category, class E of MEDIOLANUM FONDCUENTA it revalued in the year by 0.55% and by 1.21% in the last annual period, in which it registered a volatility figure of 0.41%.

Its management takes as a reference the profitability of the EURIBOR index at six months, solely for informational or comparative purposes. The investment is focused on short-term public and private monetary and fixed income assets, as well as deposits from credit institutions and unlisted money market instruments that are liquid, with a duration of less than two and a half years.

The total exposure to currency risk does not exceed 5%, with a portfolio duration ranging from 5 to 18 months. At least 70% of the portfolio has a rating equal to or higher than Investment Grade or that of the Kingdom of Spain. Fixed income mainly includes issues traded in European markets, although you can invest in fixed income from emerging countries up to a maximum of 15%.

Among the issues with the highest representation in its portfolio we find bonds of FCC Aqualia SA 1,413 06/22 (2.64%), Bulgarian Energy HLD 4,875 08/21 (2.44%), Acciona Financiacion FIL 0.558 10/21 (2.23%), NE Property BV 2,625 05/23 ( 2.23%), and Autostrade per Litalia Obligations 1,625 06/23 (1.98%). Its fixed commission is 0.25% and deposit 0.15%. It has assets under management of 60 million euros.

Italian Treasury Bonds

The DX class of GENERALI INVESTMENTS SICAV – EURO SHORT TERM BOND obtains in the year a profitability of 0.51% and 0.55% in the last year, with a volatility data in this last period of 0.42%.

Its investment objective is to outperform its benchmark by investing primarily in debt securities and money market instruments denominated in euros.

Your portfolio can include both variable coupon bonds and fixed income securities with investment grade credit ratings. The manager has full discretion over the composition of the portfolio and the extent to which the portfolio and fund performance may deviate from those of the benchmark, the Eonia Capitalization Index Capital 5 Day.

The largest positions in its portfolio correspond to Italian Treasury Bonds BTPS 0 01/15/24 (15.12%), BTPS 0 04/15/24 (10.07%), CCTS EU 07/16/23 (6.59%), and BTPS 0, 3 08/15/23 (5.59%) in addition to the Greek Republic Hellenic issue 3.45 02/04/24 (5.57%). The minimum investment necessary to subscribe the DX class of this fund is 500 euros, applying to its participants a fixed commission of 0.30% and a deposit of 0.05%.

The policy of zero or negative interest rates continues to be a fundamental support for the market, with investors focusing on the eventual reduction of bond purchases by the United States Federal Reserve.

Something that could start to happen later this year. On the other hand, the unprecedented global fiscal stimulus should boost consumption and growth, with growth of the Gross Domestic Product (GDP) during the second quarter that can be around 10%.

***Paula Market is director of analysis at VDOS

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