Market Update from 7IM
Alternative Investments
We would like to share with you a market update from investment managers 7IM...
Our Problem
It’s no secret we feel that fixed income investments are not currently able to offer two of their key historic characteristics, namely (i) a significant income; and (ii) diversification from equity investments. Therefore we have broadened our exposure into alternative investments to access strategies that can still display some of those desired “bond-like” characteristics. Some wealth managers look to hedge funds to meet this objective, but from our perspective, whilst many managers can and have delivered strong returns we have a few reservations – specifically (i) high fees; (ii) lack of transparency; and (iii) illiquidity.
Our Approach
Our process with alternative investments is always the same:
· Build in-house where possible, keeping costs down
· Used to express a specific view
· Transparency, simplicity and liquidity are key
Our Solution:
One of our solutions bought in November 2015 is our BNP Equity Volatility Dispersion DAX. This note allows us to gain direct exposure to volatility without paying the high costs traditionally associated with doing so. It looks to benefit from the volatility of the underlying constituents of the German DAX versus the index itself. This trade expired in December having gained 16% in local terms over one year. Importantly, given the aim, the gains were largely in periods when the equity market fell. E.g. Q1 2016.
If you would like to discuss alternative inmvestments, please do not hesitate to contact the investment team at KDW.
Tel: 01727 85 22 99
Emails: investments@kdw.co.uk
PAST PERFORMANCE IS NOT NECESSARILY A GUIDE TO FUTURE PERFORMANCE. THE VALUE OF INVESTMENTS AND THE INCOME FROM THEM CAN FALL AS WELL AS RISE AND YOU MAY NOT GET BACK THE AMOUNT ORIGINALLY INVESTED.