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CSA BVG 25-45 Dynamic – Passive investments with dynamic risk control

06.05.2016

Finreon launches together with the Credit Suisse and the Credit Suisse Investment Foundation the investment group CSA BVG 25–45 Dynamic

As of April 28, 2016, Finreon has launched in cooperation with Credit Suisse and Credit Suisse Investment Foundation the investment group CSA BVG 25–45 Dy­namic. With its dynamic risk management, the new investment solution offers an innovative approach for tackling the challenges of the current market environment in a balanced portfolio. The solution is based on the reliable collaboration of Finreon and Credit Suisse – Finreon functions as independent investment advisor in the area of risk management, while Credit Suisse is responsible for the portfolio management of the investment group. 

The current low interest rate environment forces investors to take higher risks in order to achieve reasonable returns, especially as risk-free asset classes yield negative returns. At the same time, risk management gains in importance due to the increase in turbulences on the markets. While normal fluctuations on the equity and bond markets are tolerable for the investor, crashes and associated substance losses represent an immense problem for the investor.  

Thanks to its dynamic risk management, the new investment solution CSA BVG 25–45 Dy­namic allows investors tobenefit from the earnings potential of the individual asset classes during calm market phases. In contrast, during high risk phases, the investment group reduces the risk of large substance losses through systematic hedging. The investment group CSA BVG 25–45 Dynamic combines the advantages of active and indexed investing. Thereby, most important risks in the portfolio are managed systematically on the basis of efficient and risk-controlled building blocks. 

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 The dynamic management of the equity and bond exposure is based on proprietary risk indicators, which measure the risks for large distortions on the markets by means of a broad variety of different stress factors on a daily basis. The risks of the prevailing market re­gime are then shown as risk signal lights. 

Based on the reliable Finreon Tail Risk Indicator, which measures the risk for large substance losses on the equity markets, the equity exposure is managed systematically between 25% and 45% (effective exposure considering the included reserve for rebalancing between 23% and 48%) in a rule-based way (equities, risk-controlled).  The risk-controlled management of the bond exposure is based on the Finreon Fixed Income Indicator, which controls for interest (duration) and credit risk in a systematic way (bonds, risk-controlled).

Based on this risk management, the investment group CSA BVG 25–45 Dynamic allows investors to benefit from the earnings potential on the equity and bond markets while at the same time controlling for large substance losses. 

In the following, the most relevant advantages of the investment group CSA BVG 25-45 Dynamic are summarized: 

  • The best of both worlds: The advantages of an active, systematic risk control (Finreon) combined with the efficiency and transparency of passive solutions (Credit Suisse).
  • Reduction of large substance losses: The rule-based management of equity, interest and credit risks aims at reducing large substance losses.
  • More return for less risk: Over medium term, a more efficient use of the risk budget allows to achieve more return for less risk.
  • Reasonable innovation: Transparent, efficient, and simple – risk-controlled management of a balanced portfolio within a single investment.
  • Reliable collaboration: Credit Suisse and Finreon cooperate for institutional clients with great success: well-practiced processes and high interaction.  
For further information and detailed documents, please refer to the following links (only available in German):
 

Report

Presentation

Advertorial (April 2016)

 

For questions about the investment group CSA BVG 25-45 Dynamic, please contact: 

Wanja Eichl, Business Development, Finreon (wanja.eichl@finreon.ch, +41 71 230 08 18) 

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