SYZ Asset Management’s absolute return GBP strategy passes successful 10-year milestone

Launched in April 2008, the fund has built up an outstanding record – rising in value in 9 out of its 10 years of existence, including in 2008 and 2011, which were notoriously difficult years for investors. The one year it did fall in value – 2015 – it limited its loss to just 0.5%.*

Since launch, the fund has been led by portfolio manager, Fabrizio Quirighetti, supported by the SYZ AM Multi-Asset team. His consistent, tried-and-tested approach has navigated investors through market cycles, including the worst equity market crash since the Great Depression.

The fund is part of SYZ AM’s absolute return strategy, which was created in 2003. An integral part of the strategy is its flexibility. This has been very important in enabling it to outperform in markets that have changed considerably over the years.

The strategy has successfully guided investors through two major market crises – the global financial crash and the European debt crisis. Portfolio manager Fabrizio Quirighetti explains:

“2008 was a terrible year for investors, with the sub-prime crisis causing the global equity markets to lose -38.0% over the year**. This made it a significant test for our strategy’s focus on capital preservation, and it came through this with flying colours.”

The manager’s steadfast focus on risk control has been vital over time.

2011 was also a challenging time for investors, and European ones in particular, due to the eurozone debt crisis. The OYSTER Absolute Return GBP delivered a +1.6% return (net of fees) over the year1 due to the way the manager was able to find relative-value opportunities within fixed income and minimise drawdowns.

“We only took exposure to European equities through core markets during this period, avoiding the Eurozone periphery.” said Quirighetti.

Given today’s low, albeit rising yield environment, institutional and private investors are struggling to find valid alternatives to their cash or bond allocations. Moreover, investors are also wary of the stock markets’ volatility and stretched equity prices. SYZ AM’s absolute return strategy represents a compelling proposition, particularly as, contrary to many absolute return products that rely on complex “black box” strategies, SYZ AM’s approach is simple and transparent. Indeed, it invests in conventional investments, using only investment grade bonds, a moderate allocation to equities, no short positions and limited exposure to alternative investments.

The Absolute Return strategy is managed in-house by Fabrizio Quirighetti (CIO and Co-Head of Multi-Asset) as ultimate-decision-maker and Adrien Pichoud (Chief Economist). Both benefit from the input of the 16 members of SYZ’s Investment Strategy Group (ISG): The ISG includes several multi-asset, equity, credit and quantitative investment experts.

The strategy’s offering today includes funds denominated in GBP, EUR and CHF, that totals EUR 1.4 bn*** in client assets. The fund targets fixed-income like returns within a 2 to 4% volatility budget.

SYZ Asset Management’s Absolute Return strategy can be an ideal solution for investors looking for a defensive multi-asset portfolio or to replace part of their allocation to fixed income if they have concerns about interest-rate risk and high bond valuations. as the fund is in essence a fixed income strategy that tactically uses equities and other asset classes (such as currencies) as a source of diversification and return.

Quirighetti, explains “The past 15 years have taught us one big lesson: that the markets don’t stand still, and that neither can we as an asset manager. We’ll continue to apply our flexible approach to the strategy, adapting not just the portfolio’s composition in the face of changing markets, but also the way we apply its guidelines and how we exploit the opportunity set available to us”.

He added, “By employing this same philosophy that has served us so well over the past 15 years, we are confident of further attractive returns in the years ahead: while past performance is not a reliable guide to the future, it’s a true measure of what has been achieved so far over a highly dynamic market cycle”.

* Performance figures net of fees since launch of OYSTER Absolute Return GBP class I M GBP as of 30.04.2018
** MSCI World Net Return GBP hedged.
*** As at 29.12.17