Top Picks of the Month – February 2021
We show here a selection of funds that might be of interest to you. They were chosen either for their outstanding performance, which is likely to continue, or for their potential for attractive returns or diversification given current and expected market conditions.
- EM equities: GemEquity
The fund is a core offering to gain exposure to the emerging markets equities with a growth bias, cyclical exposure is limited to 33% of the portfolio. The fund combines fundamental bottom-up and macro analysis. Stock picking is focused on sustainable businesses with good management able to generate growing free cash flows, mainly mega/large caps. The top-down analysis aims to identify inflexion points in macro indicators to drive country/sector views. The strategy focuses on long-term consumer trends in developing economies. Current barbell strategy: 2/3 of the portfolio is invested in north Asia, i.e China (overweight in A-shares), Korea and Taiwan, which appears less risky than cyclical markets such as Brazil or Russia. High exposure to internet and e-commerce companies.
- Short Duration Credit: Lord Abbett Short Duration Income Fund
The fund is a flexible multi-sector credit strategy. It seeks to deliver stable and consistent income with a low duration (<2 years) and primarily through investment grade debt. Investment universe includes IG Corporate, High Yield Corporate, CMBS, US government, US agencies and ABS. After experiencing its worst month ever in March 2020 (-6.2), the fund rebounded strongly, finishing the year in positive territory (+2.3%). The fund shows again its strong resilience in every market conditions. The strategy has had positive returns every calendar year for more than 20 years except for 2008 (-0.2%). Over the quarter, they modestly increased the Fund’s allocation to sovereign debt, as the asset class has significantly lagged domestic credit. They decreased the Fund’s allocation within investment grade corporate debt and bank loans while taking gains on specific issues which had achieved significant spread tightening over the quarter. The fund should be considered in a cash enhanced allocation with a yield-to-worst of 1.9% for a single A rating and a duration of 1.9 years.
- Multi-Asset Risk Premia: Nordea 1 – Alpha 15 MA Fund
The fund is a multi-strategy, risk premia based on liquid solution managed in-house, and uses several low and negatively correlated strategies consisting of equities, fixed income, and currencies. The fund will typically implement some of the different investment strategies through pair trades and/or long/short positions across the different investable asset classes. Over time, the fund is aiming to build a largely market neutral portfolio. Launched in 2018 the fund aims to generate a return of cash + 7%-9% p.a. over a full cycle with a volatility between 10%-15% p.a. on average. In 2020 the fund outperformed its objective but more importantly has shown what we expect from a market neutral multi-asset strategy: reactivity by switching into a risk-off mood in February and back into a risk-on stance in April and low correlation to markets. In March 2020 for instance the Nordea 15 offered strong returns and diversification (+5.0%). Overall, the underlying directional strategies thrived with strong returns, as they benefited from clear trends on equities, yields and volatility. Moreover, their defensive risk premia strategies also posted flat to positive returns and have offset the negative impact of their more aggressive ones.