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A “value” fund
Questions for ARTY’s investment management team ARTY invests in European equities and corporate bonds in its search for the best risk/reward profile. The fund, which has AuM of €479m, has been managed by Olivier de Berranger since its creation. He is assisted by Thibault Villaceque (analyst) and Uriel Saragusti (credit analyst). ARTY climbed 8.3% in 2013 and has achieved an annualised return of 6.3% since its inception in 2008. The fund has kicked off 2014 with a 5-star Morningstar rating: how can you explain its superb success? - ARTY benefited from the compression of fixed income spreads, particularly in the high yield segment. - The fund’s equity component also drew strength from the good progress made by European equities in 2013. - On top of that, our high level of equity/bond allocation flexibility allowed us to keep performance steady, especially during difficult periods. What is ARTY’s equity strategy at the moment? - As we still firmly believe that European equities have a lot to offer, we have raised the fund’s equity exposure from 28% at the end of August 2013 to 34% today. - Equities are set to remain ARTY’s main performance driver in the months to come. That said, they have already risen a lot in value and so careful stock-picking is the key. - Until very recently the equity component was highly focused on stocks benefiting from world growth, but it is now switching from growth stocks (SAB MILLER, UNILEVER**) to value stocks (ORANGE, SAIPEM**), in line with all the equity strategies of the Financière de l’Echiquier fund range. What strategy does the team have in place for its fixed income investments? - The fixed income component remains focused on the high yield and non-rated segment. - To protect it from sudden changes in interest rates, we are actively managing the portfolio’s duration. We currently favour short durations, and sometimes hedge interest rate risk using products traded on regulated markets. - We are still paying particular attention to issuer quality and special situations: we are buying credit risk more than interest rate risk. - Always on the look-out for the best opportunities, we recently opened positions on issuers from the Iberian Peninsula: BANCO ESPIRITO SANTO in Portugal and GESTAMP in Spain**. What is your outlook for the financial markets in the coming months? - We are keeping a close watch on the US Federal Reserve’s monetary policy. However, we are fully confident that the European Central Bank will keep interest rates favourable to European risky assets in the medium term. - While European short-dated yields will remain low, long-dated yields will rise, though at a measured pace: the bond markets won’t crash! ARTY invests in equities and corporate bonds and presents a risk of capital loss. It is specifically exposed to credit risk due to its investments in high yield securities. Credit risk is the risk of a private issuer’s credit rating being downgraded or of the issuer’s default. The fund is managed on a discretionary basis: there is a risk that the fund may not be invested in the bestperforming securities at all times. For more information on risks and the fees charged by the fund, please consult the prospectus and KIID, which are available on request.
This document, intended for professional investors, is not contractually binding. Past performance is not a guide to future performance and is not constant over time. It should therefore not be the main factor in the subscriber’s investment decision: the other information included in the fund’s investment reports should also be taken into consideration. *at 28/02/2014. **The companies mentioned are given by way of example: neither their presence in the portfolio nor their performance are guaranteed.