Going on holidays it is usually a time to switch off, enjoy the beach or the mountain, spend time with the family, and a time to recover from the stress of work, but what happens when you are a fund selector and have to turn off your phone? Jean-Baptiste Fargeau, Fund Selector Manager at Banque de Luxembourg Investments, and he has told us his favourite funds to go on holidays with. We have spoken to Jean-Baptiste Fargeau, Fund Selector Manager at Banque de Luxembourg, and he has told us his favourite funds to go on holidays with.
While thinking about funds not to worry about during your holidays, one might think about low risk, low duration funds, highly uncorrelated or balanced funds. Maybe the first rule to keep in mind if you want to enjoy your holidays is to diversify your investments…or have applied the saying : sell in May!
Among the funds we might consider to be safe during the summer, we can highlight strategies across various categories and geographies: flexible/total return, equities and bonds.
First we can mention Varenne Valeur, this absolute return fund uses different investment sleeves: equities long and short, special situations, financial subordinated bonds, private debt, indices. The strategy shows a good upside/downside capture ratio thanks to their timely use of tactical overlays.
Oddo Polaris Moderate is also a candidate for your summer investments as the fund has a conservative and diversified profile with a good drawdown management. Its objective is to limit stock market selloffs and generate a higher return than global bond markets. Its equity sleeve is focused on quality companies mainly from Europe and the United States. While its conservative bond sleeve is invested in superior euro credit rating issues.
The French Moneta Multi Caps is another holiday candidate. This Blend fund is managed with a fundamental approach selecting value as well as growth stocks. The fund also includes a green bucket of companies contributing to the energy transition. The portfolio is well diversified with no positions above 5%.
Still in Europe, Robeco QI European Conservative Equities uses a quantitative model focusing on low volatility stocks. Selected companies are also characterized by attractive valuation, good earnings momentum and positive analyst revisions. The portfolio contains more than 150 lines, some of which are small caps. The fund suffered in 2020 in the March selloff but recovered well in 2021 thanks to its value and small cap exposures.
Robeco QI Emerging Conservative Equities applies the same approach to the emerging markets. Like the European version, the fund was impacted by the selloff in March 2020 but enjoyed a pretty strong first half of 2021. In a more exotic area, we can mention
Gavekal China Fixed Income. This strategy invests in the onshore (CNY) and offshore (CNH) Chinese bond market. The portfolio contains corporate, sovereign and Chinese provinces bonds, as well as panda bonds. The duration ranges between 3 and 4 years, and the overall rating of the portfolio of A- is close to that of Chinese sovereign bonds. The onshore part is heavily invested in Chinese sovereign, and “policy bank” securities (banks implementing the fiscal and budgetary policy of the state). While the offshore part is more focused on corporate bonds. Chinese bonds are highly uncorrelated to US sovereign bonds.
Finally and also in the bond spectrum, the Carmignac Flexible Bond fund. This go anywhere strategy uses different performance drivers: duration (from -3Y to +8Y), market allocation and exposure (usually between 50 and 100%) and bond picking made by each bond specialist at Carmignac. As the market exposure can vary, the currencies are systematically hedged against Euro and the exposure to emerging markets plus high yield is maximum 50% of the assets, the fund is quite defensive in its positioning.