LOIM launches diversified Alternative Risk Premia
|10/28/2014 | 07:37am|
Lombard Odier Investment Managers (LOIM), the $54 billion institutional asset management arm of the Lombard Odier Group, has built a long/short strategy across asset classes aimed at improving risk-adjusted returns with a low correlation to traditional investments.
LO Funds – Alternative Risk Premia, a long/short Fund*, is designed to help in today’s environment of declining markets and uncertain prospects, where investors find the search for returns increasingly hard. Investors also need liquidity and cost-efficiency from their portfolios and know that exposure to traditional asset classes may correlate just when they need to be diversified.
By applying an Alternative Risk Premia approach with the ability to go systematically long and short, LOIM offers a strategy aimed at enhancing risk-adjusted returns from traditional asset classes in a stable way within an investment structure that aims to provide robust portfolios, however markets perform.
“Alternative Risk Premia used to be available only from hedge fund firms,” said Carolina Minio-Paluello, deputy Chief Investment Officer of LOIM. “We can offer similar benefits for investors’ portfolios in a cost-effective and systematic way. Our teams have the expertise and experience to implement long/short strategies using these techniques.”
The risk premia draw on two complementary sources of return: income and trend. Income tends to deliver a regular yield flow in stable and improving markets while trend premia have the ability to go against the market and aim to reduce exposure to market drawdowns. An example of an income risk premia is ‘carry credit’ which aims to exploit the yield difference between the investment grade and high yield corporate universes. In unchanged market conditions, investors may benefit from the higher credit spread of the high yield. A trend premia uses momentum signals within defined time frames to take long or short positions in a diversified set of assets.
“Five years ago we developed a risk-based portfolio construction infrastructure, initially for long-only, diversified Smart beta,” said Alexandre Deruaz, Head of Smart Beta Solutions at LOIM. “We can now also apply it to our long/short approaches.”
LOIM manages $5 billion in a range of Smart beta fixed income, equity, commodity and hedge-fund replication strategies, launched since 2009. LO Funds - Alternative Risk Premia, launched 6 August 2014, already manages more than $50 million on behalf of clients.
LOIM’s Geneva-headquartered business, a unit of the Lombard Odier Group, managed $54 billion on behalf of clients at the end of June 2014. LOIM’s managers seek to deliver performance by identifying sources of risk and return through absolute return, Smart beta and high conviction strategies. LOIM offers a range of solutions including risk-based asset allocation, thematic equity investments, convertible bonds, absolute return as well as single-manager hedge funds.
*The Fund adds short exposure through the use of derivatives. It is licensed for distribution in Austria, Belgium, France, Germany, Italy, Liechtenstein, Luxembourg, the Netherlands, Spain, Sweden, Switzerland and the UK.
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Issued by Lombard Odier Asset management (Europe) Limited which is authorized and regulated by the Financial Conduct Authority.