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Ethna-DEFENSIV

Share classes Description
Share class
D-1
YTD
5 years

Applies, among others, to the share class Ethna-DEFENSIV (A).
As of: 30.06.2022

Out of 5 676 Cautious Allocation funds as of 31.05.2022.
Based on 85.99% eligible corporate AUM and 100% of eligible sovereign AUM. Data is based on long positions only.

Fund profile

The Ethna-DEFENSIV is a bond-oriented, multi-asset fund that does not follow any benchmarks. The actively-managed fund, which has the most defensive risk profile of the Ethna Funds, focuses on bonds from issuers in OECD countries, with its core investment in a high-quality portfolio of government and corporate bonds. Although these bonds tend to be of a more conservative nature, they are managed in a very flexible manner. This allows us to quickly align the fund’s risk profile to prevailing market conditions and to take advantage of attractive single name securities. In addition, bonds with a rating below investment-grade can be added.

The Ethna-DEFENSIV can also include up to 10% in equities, which it generally does through futures. Last but not least, the fund may include up to 10% in commodities in its portfolio, which it generally does through ETCs. Another important performance driver of the fund is the active management of spreads, duration, and currency through liquid instruments, also known as overlay management. Spread risks and duration are managed by actively adjusting maturities and swapping bond issuers. In the Ethna-DEFENSIV, duration can also be managed using Bund and Treasury futures; while currency is managed via currency forwards.

The top-down approach in the Ethna-DEFENSIV

The Ethna-DEFENSIV’s Portfolio Management Team, which has a proven track-record in the fixed income space, uses a top-down approach with a clear view of macroeconomic developments to determine not only the appropriate bond allocation but also its investments in other asset classes. This, together with its bottom up bond selection process, means that the Ethna-DEFENSIV can flexibly select the most appropriate opportunities available while, at the same time limit potential risks, and manage its volatility and drawdowns.

The Ethna-DEFENSIV as a base investment for conservative investors

With a balanced investment strategy that values diversification and liquidity, the Ethna-DEFENSIV’s aims are capital preservation and generating positive returns over a mid-term (3 – 5 year) investment horizon. This makes it suitable as a base investment for conservative investors who want to benefit from a lower risk strategy in the global financial markets.

 

The Ethna-DEFENSIV is a bond-oriented, multi-asset fund that does not follow any benchmarks. The actively-managed fund, which has the most defensive risk profile of the Ethna Funds, focuses on bonds from issuers in OECD countries, with its core investment in a high-quality portfolio of government and corporate bonds. Although these bonds tend to be of a more conservative nature, they are managed in a very flexible manner. This allows us to quickly align the fund’s risk profile to prevailing market conditions and to take advantage of attractive single name securities. In addition, bonds with a rating below investment-grade can be added.

The Ethna-DEFENSIV can also include up to 10% in equities, which it generally does through futures. Last but not least, the fund may include up to 10% in commodities in its portfolio, which it generally does through ETCs. Another important performance driver of the fund is the active management of spreads, duration, and currency through liquid instruments, also known as overlay management. Spread risks and duration are managed by actively adjusting maturities and swapping bond issuers. In the Ethna-DEFENSIV, duration can also be managed using Bund and Treasury futures; while currency is managed via currency forwards.

The top-down approach in the Ethna-DEFENSIV

The Ethna-DEFENSIV’s Portfolio Management Team, which has a proven track-record in the fixed income space, uses a top-down approach with a clear view of macroeconomic developments to determine not only the appropriate bond allocation but also its investments in other asset classes. This, together with its bottom up bond selection process, means that the Ethna-DEFENSIV can flexibly select the most appropriate opportunities available while, at the same time limit potential risks, and manage its volatility and drawdowns.

The Ethna-DEFENSIV as a base investment for conservative investors

With a balanced investment strategy that values diversification and liquidity, the Ethna-DEFENSIV’s aims are capital preservation and generating positive returns over a mid-term (3 – 5 year) investment horizon. This makes it suitable as a base investment for conservative investors who want to benefit from a lower risk strategy in the global financial markets.

Portfolio Managers

Dr. Volker Schmidt

ESG

ESG – taking environmental, social and governance criteria into account

Our aim is to offer clients responsible investment solutions with a competitive and sustainable return, as reflected in our investment guidelines and processes. The Ethna-DEFENSIV pursues an ESG strategy that complies with Article 8 of the EU’s Sustainable Finance Disclosure Regulation (2019/2088). In its bond and equity investments, the fund therefore gives preference to companies that have low exposure in terms of significant ESG risks, as well as companies that actively manage and thus reduce the ESG risks inevitably associated with their business activities. In addition, the sustainability approach taken by the Ethna-DEFENSIV is underscored by comprehensive exclusions:

  • Investments in companies with a core activity in armaments, tobacco, pornography, speculation in basic foodstuffs and/or the mining/distribution of coal are prohibited.
  • Furthermore, we do not invest in companies that have been found to be in serious breach of the principles of the UN Global Compact and have no convincing plan in place to remedy the situation.
  • In the case of sovereign issuers, we exclude investments in countries that have been designated as “Not Free” in the annual analysis carried out by Freedom House.
 

What is ESG?

ESG is the abbreviated version of ‘Environmental, Social, and Governance’, criteria that many investors use alongside financial factors in their investment decisions.

 

ESG in our investment process

1. Broad exclusion of certain sectors  that contradict the ESG principles

2. Assessment of the overall ESG rating of the individual companies based on the data from sustainalytics

3. Individual analysis of the particular ESG parameters of a company

 

Our commitment

In November 2017, we became a signatory to the Principles for Responsible Investment. These are six principles developed by investors and supported by the United Nations.

Opportunities & Risks

All financial investments are associated with opportunities and risks. Below you will find a compact overview of the opportunities and risks of the Ethna-DEFENSIV:

 Opportunities

  • A professional Portfolio Management team with many years’ experience.
  • Participation in positive performance on equity and bond markets.
  • Reduction in value fluctuations due to combination of multiple asset classes and spread of invested capital across a variety of
    individual securities (diversification).
  • Active risk management and hedging transactions (emphasis on capital preservation).
  • Active portfolio management with the aim of delivering positive returns, even in weak market phases.
  • Stability and continuity through a focus on fixed income securities.

 Risks

  • Market, sector and company-related price losses in the fund’s equity and bond investments; also as a result of a general rise in yields and/or increase in yield premiums for specific bond issuers.
  • General, geographical and geopolitical country risks: these include the risk that an issuer of a bond, despite being solvent, cannot fulfil its obligations due to an inability or unwillingness
    on the part of a particular country to transfer funds to another country.
  • Issuer, counterparty credit and default risk due to investing in bonds, equities and hedging trades: this includes the risk of insolvency due to issuer or counterparty debt overload or
    illiquidity. A total loss of the affected investment instrument is possible.
  • Exchange rate risks through investing in foreign currencies or in equities and bonds denominated in a foreign currency.
  • The investor suffers a loss if they sell the fund units at less than the acquisition price.

For detailed information on the opportunities and risks of investing in the fund, please refer to the sales prospectus.

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