The fund is based on a value protection concept proven over many years and can draw upon Lupus alpha Alternative Solutions expertise of more than a decade.
- Large, experienced portfolio management and research team for Alternative Solutions with more than 20 experts
- Own team for quantitative investments
- Proprietary databases
- Critically scrutinised backtesting methods
- Methodically sound, experienced risk management
- Complete control over trading process
Value protection concept for sustainable exposure to emerging markets equities
Lupus alpha Structure Sustainable Emerging Markets enables sustainable and conscientious exposure to emerging markets equities as part of a value protection concept. As a result, investors can benefit from the diversification effects of this asset class in relation to developed equity markets. Investors also profit from the fundamentally dynamic economic development in these markets, characterised by significant pent-up demand and often favourable demographic factors, thus avoiding larger drawdowns. This element is essential for many investors, as the performance of these equity markets, with their unique return opportunities, is characterised by large fluctuations in value.
Lupus alpha Structure Sustainable Emerging Markets invests in the MSCI Emerging Markets Index filtered by imug/EIRIS1 in accordance with a variety of predefined sustainability criteria and participates in the performance of equities from a current selection of 20 emerging markets on four continents (Asia, Europe, Africa and Latin America). The following exclusion criteria are among those taken into consideration when composing indices: nuclear, chemical or biological weapons, production of civilian handguns, landmines, armaments, human rights violations, spirits, tobacco.
As a result, in particularly critical sectors such as pharmaceuticals, chemicals, utilities, automotive and mining, additional central ESG (environmental, social and governance) key criteria are applied using imug/EIRIS's 'best-in-class' approach to select only the most favourable companies. The UBS Sustainable Equity Index on MSCI EM TR, which currently includes almost 300 stocks from 20 countries, is calculated on this basis using a size filter that excludes poorly capitalised and thus potentially illiquid securities. It covers more than 50 per cent of market capitalisation. This index forms the basis for the investments made by Lupus alpha Structure Sustainable Emerging Markets.
The fund's value protection concept is implemented by actively managing the equity ratio, which is intended to limit losses to a maximum of 10 per cent per calendar year in the event of negative market performance. To do this, the fund uses risk models proven in Lupus alpha's Structure Invest family since 2003, keeping equity exposure between zero and a maximum of 100 per cent.
Potential equity exposure is determined using expected shortfall calculations and dynamically adjusted to ensure that the fund can participate to an ever greater extent in further price increases in rising markets and does not limit its profit opportunities.
This results in a favourable, asymmetric risk-return profile (opportunities go up, protection goes down). Despite the limitation of risk, it is even possible to outperform the index over longer periods. This value protection concept for investments in emerging market equities limits sharp declines on the markets and ensures that investors can continue to participate, to some extent, in positive developments.
- The Sustainable Investment working area of Hannover-based firm imug GmbH specialises in the valuation of companies, countries and banks in accordance with sustainability criteria. Together with London-based firm EIRIS and a global network of independent research institutes, imug helps institutional investors, investment companies and banks to implement individual sustainability preferences. More than 100 asset managers and asset owners use research analysis from imug and EIRIS.
For more details, please visit www.imug.de and www.eiris.org
The objective of the fund is to give investors access to the high growth potential of emerging market equities while taking specific sustainability criteria into consideration and using the value protection concept to limit equity risk in times of crisis.
Investors participate in equity market development without bearing the full equity risk. The risk of loss is limited to a maximum of 10 per cent per calendar year.
The value of investments and the income from them can go down as well as up and you may get back less than the amount invested.
A full list of risks applicable to this fund can be found in the Prospectus.