Erwin Lochten
Managing Director
Total Return
The reliable and scalable solution for investors with a focus on steady returns and calculable risks.
Investment horizon and risk-bearing capacity
Investment approach
When selecting an investment approach, the investment horizon and risk-bearing capacity are key parameters that must be clearly defined. The longer the investment horizon, the higher the risk-bearing capacity usually is. However, for institutional investors in particular, there are numerous reasons why investment horizons are very short or risk-bearing capacity is low. For these investors, we offer a perfectly scalable and reliable investment solution with our total return strategy.
Investment process & Risk management
Reliable protection and reliable participation
Our primary objective is to participate in liquid risk premiums while adhering to firmly defined risk specifications. To achieve this goal, we strictly adhere to mathematical and statistical methods. In doing so, we take advantage of the characteristics of options, but without relying on options in the portfolio. The idea behind it: As with an option, risk positions should be reliably hedged at the end of the term (usually the end of the calendar or fiscal year). At the same time, risk premiums are reliably collected in the event of a positive market development.
Systematic and discretionary process
However, the investment process for the total return and capital preservation portfolios is different from what one might initially expect: Instead of buying options into the portfolios in the amount of the risk budgets set by our investors, we do not use them at all. Instead, we replicate - as part of a systematic, scientifically based and discretion-free process - these very options in our client portfolios at any point in time (so-called option replication). This results in a number of advantages for our investors, such as the highest possible liquidity, flexible adjustment options for the option structure (e.g. risk budget changes during the year), no dependency on option prices, etc.
Dynamic portfolio allocation and stringent risk management
The result is portfolios that are characterized by a very dynamic allocation to the risk premiums equities and bonds. The allocation is at all times in line with the option structure to be mapped (without having to explicitly use options). The portfolio therefore has a "multi-asset" structure at any point in time, as it contains only equities and government bonds (no options). In this way, we achieve participation in liquid risk premiums while at the same time adhering to firmly defined risk specifications.
Your advantages
Our Total Return Strategy
Suitable for investors, ...
- who are looking for a solution with a positive expected return and very limited risk for their liquidity investment (e.g. companies).
- with a focus on steady returns and preservation of substance (e.g. churches, foundations).
- who are subject to legal or statutory risk restrictions (e.g. pension funds, provident funds).
- who are looking for a transparent, efficiently implemented and scalable strategy that delivers reliable and repeatable results.
- who are looking for an actively managed portfolio allocation based on individual specifications.
- who value stringent and systematic risk management.
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