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Launch of the Finreon Emerging Markets Equity IsoPro® Fund and the Finreon World Equity IsoPro® Fund

27.02.2013

Passive Investment but without Construction Deficits – Now Also Available for Global and Emerging Markets Equities

The newly launched equity funds‚Finreon World Equity IsoPro®‘ and ‚Finreon Emerging Markets Equity IsoPro®‘ allow institutional investors to invest in global equities and emerging markets equities, but without bearing the construction deficits inherent in market weighted indices.

The innovative Finreon IsoPro® methodology is now available in two new funds covering Global equities ex Switzerland and Emerging Markets equities. „With the two newly launched funds, institutional investors have the opportunity to invest both in global and emerging markets equities without incurring the classic construction deficits of passive index tracking“, says Dr. Ralf Seiz, CEO Finreon AG.

Passive investments which track market capitalized equity indices have experienced great inflows in the last decade, as they offer wide diversification and high level of transparency at low costs. However, by now it is well known that market weighted indices carry certain construction deficits. In particular, single stocks, sectors or regions can reach massive weights in an index (concentration risks). This could be very well observed during the boom of Japanese equities in 1980, in the internet-bubble at the turn of the millennium or the financial crisis of 2008. On the level of single securities, it can be observed that exaggerated expectations lead to “mini-bubbles“ in “glamour stocks”.

Any passive investor in a market capitalized index fully participates in bubbles, which increases risks and decreases the returns. “Portfolio weights independent of the market price, a wide diversification and the inclusion of risk characteristics helps investors to create higher and more robust returns in the medium term”, explains Ulrich Carl, Senior Portfolio Manager of the Finreon IsoPro® solutions.

The IsoPro®-methodology, developed by Finreon, allows to both benefit from the advantages of passive investments while avoiding its construction deficits. IsoPro® ensures broad diversification and risk control, as concentration risks are explicitly avoided. As IsoPro® is calibrated to show the same risk characteristics as the respective market capitalized benchmark, it can therefore be used as a full substitute for a passive index investment.

As investment advisor Finreon is responsible for the methodology, Credit Suisse is in charge of asset management, fund administration and fund custody. Finreon Emerging Markets Equity IsoPro® and Finreon World Equity IsoPro® are funds under Swiss law and available for qualified investors only.

The following classes are available:

Finreon World Equity IsoPro®:

  • Finreon World Equity IsoPro ® (USD) A-class: 
ISIN: CH0200878525, Valor: 20087852
  • Finreon World Equity IsoPro ® (USD) I-class: 
ISIN: CH0200879101, Valor: 20087910
  • Finreon World Equity IsoPro ® (USD) D-class :
ISIN: CH0200878681, Valor: 20087868

Finreon Emerging Markets Equity IsoPro®

  • Finreon Emerging Markets Equity IsoPro ® (USD) A-class: 
ISIN: CH0200879374, Valor: 20087937
  • Finreon Emerging Markets Equity IsoPro ® (USD) I-classe:
 ISIN: CH0200884168, Valor: 20088416
  • Finreon Emerging Markets Equity IsoPro ® (USD) D-class: 
ISIN: CH0200881537, Valor: 20088153

For any questions regarding the Finreon IsoPro® funds please contact:
Simon T. Müller, Director, Finreon AG 
(simon.mueller@finreon.ch, +41 71 230 08 10)

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