Equity – Minimum Volatility
Philosophy
Optimize return potential with regards to levels of absolute risk
Created in 2010, the Minimum Volatility strategy aims to minimise 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 investment team first seeks to eliminate behavioural biases that can influence investment decisions (overconfidence, herd mentality, lotteries, greed, etc.) but also biases caused by benchmark-related constraints (known as "benchmarked management").
This risk-based portfolio construction aims to achieve efficient diversification in securities’ behaviour and thus reduce the absolute risk of the portfolio.
Key Points
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Optimized risk management for long-term results
An objective of superior risk- adjusted returns over the long term with integrated risk management throughout the investment process
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Transparency and liquidity
A pure equity investment solution with no use of any other financial instruments, aiming to achieve greater risk minimization
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Truly active management tested over the past 10 years
A pure equity strategy able to withstand various market situations and adapted to a core portfolio allocation
Investment Strategy
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 a risk-based security selection. The investment team applies minimum investment constraints (sectors, countries, market capitalisation) , 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.
Objective
To outperform the equity market benchmark over the long term while minimising overall portfolio volatility.
To offer an asymmetrical risk/return profile: participate in a growth dynamic and reduce market downturns.
Our Experts
Seeyond's Minimum Volatility strategy was created in 2010 by Nicolas Just, CFA, CIO quantitative management, 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.
