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THEAM’s smart beta equity strategies

Smart beta: an innovative approach to investing in equity markets

THEAM’s smart beta investment strategies for investing in equity markets offer private and institutional investors the opportunity to gain exposure in an innovative way to international financial markets and to many geographical regions, including Europe, the US and emerging markets. The equity funds managed by THEAM’s Quant Equity Team are based on smart beta strategies, which means that the shares included in the investment portfolio are selected according to factors identified as sources of long-term outperformance. This stock selection process, which is also known as stock-picking, relies on a systematic model that factors in easily identifiable criteria, such as equities’ profitability or volatility.

THEAM’s Quant Equity Team works closely with THEAM Research as well as BNP Paribas Investment Partners’ and BNP Paribas CIB’s quantitative research teams to identify the most relevant factors and the optimal way of combining them in different market contexts, taking into account a given investment objective. All the investment solutions managed by this team involve an active and systematic management approach, which is based on a stable and thorough investment process aimed at eliminating behavioural bias.

THEAM wins two amLeague first prizes with its 'Pure Low Volatility' equity strategy

THEAM won two prizes rewarding the top-performing management team in the 2014 amLeague championship, in the 'Eurozone equities' and 'Europe SRI' categories

 

THEAM’s equity markets smart beta investment solutions

THEAM’s smart beta investment solutions cover various categories of products that offer different risk-return profiles.

  • Low Volatility strategy: This smart beta equity investment strategy is based on the “low volatility anomaly”, which has been widely documented in academic research since the beginning of the 1970s. The research shows that a portfolio of relatively low volatility investments generates a higher risk-adjusted return over the long-term than the market index. THEAM’s range of low volatility equity investment products comprise low volatility equities from different sectors with the aim of reducing the volatility risk of the portfolio. The low volatility strategy thus seeks to limit the impact when equity markets fall while benefiting when they rise, so as to obtain a better risk-adjusted performance over the long term.
  • Guru strategy: This smart beta equity investment strategy selects the securities that offer the highest appreciation potential, by relying on the analysis of businesses’ fundamental criteria, e.g. profitability, outlook and valuation. This strategy, which is based on a systematic selection process, aims to maximiseA the absolute performance of the investment portfolio.
  • Multi-Alpha strategy: This smart beta investment strategy aims to optimise a portfolio’s risk-return profile compared with the benchmark index by gaining exposure to specific factors, such as low volatility, momentum, value, and profitability, that have demonstrated their ability to generate outperformance over the long term, all the while controlling the portfolio’s risk.

Numerous variations on each of these investment approaches are possible, for example via the choice of an open-ended or dedicated investment vehicle, varying the investment universe to which the strategy is applied, or calibrating the acceptable level of risk. This offers a very broad array of investment solutions to suit the specific requirements of each institutional or private investor.

Agefi Gold Distribution award for THEAM Europe Guru strategy

Agefi Actifs du Patrimoine 2015 - 'Specialist Equities' category - This prize rewards the strong commercial inflows of this smart beta strategy in 2014

The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay, the fund described being in risk of capital loss

On the same subject:

Investments in the aforementioned fund are subject to market fluctuation and risks inherent in investing in securities. The value of investments and the revenue they generate can increase or decrease and it is possible that investors will not recover their initial investment. Source: BNP Paribas Investment Partners.