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Launch of the Finreon Tail Risk Control® (World) Fund

09.01.2013

Risk-Controlled Investing with the Finreon Tail Risk Control® (World) Fund

The Equity Fund ‚Finreon Tail Risk Control® (World)‘, advised by the Swiss spin-off Finreon, was successfully launched. An innovative, risk-based steering of the equity quota 0% to 100% allows for an optimal use of the risk budget.

“Two ‘black swans‘ events in the last twelve years have clearly shown that the risk of holding equities via a simple buy-and-hold strategy was not properly compensated. However, if those tail events were avoided via a risk-based control of the equity quota, the investor would have been compensated for the equity risk“, says Dr. Ralf Seiz, CEO Finreon AG and lecturer at the University of St. Gallen (HSG).

The proprietary Finreon Tail Risk indicator has been developed based on most recent findings in financial market research. The indicator measures systematically and on a daily basis the risk of equity market crashes based on a number of market factors. Based on the daily tail risk signal, the equity quota is then steered from 0% (high measured risk of crashes) to 100% (low measured risk of crashes).

„The Finreon Tail Risk Control® (World) fund allows investors to manage the equity bandwidth in a risk-controlled way and to ensure an optimal use of the risk budget in a transparent and efficient manner. Especially among large institutional investors we see a broad interest for solutions to systematically avoid drawdowns“ explains Sebastian Schmuki, Senior Portfolio Manager and in charge of Finreon Tail Risk Control® solutions.

 

The equity quota is invested by means of a diversified portfolio of passive institutional funds which replicate a global equity portfolio. The fund is suitable for institutional investors who want to participate in the upside of global equity markets but without bearing the substance losses inherent in tail events. The long-term risk of the strategy is consistent with a benchmark of 50% equity and 50% LIBOR.

As investment advisor Finreon is responsible for the calculation of the risk engine, while Credit Suisse is in charge of asset management, fund administration and fund custody. Finreon Tail Risk Control® (World) is a fund under Swiss law and available for qualified investors only.

The following classes are available:

  • Finreon Tail Risk Control® (World) (USD) A-class:
ISIN: CH0200884432, Valor: 20088443
  • Finreon Tail Risk Control® (World) (USD) I-class:
ISIN: CH0200894639, Valor: 20089463
  • Finreon Tail Risk Control® (World) (USD) D-class:
ISIN: CH0200884606, Valor: 20088460

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

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