An innovative, holistic 360-degree risk management-based approach to equity investment


Our Approach

At Unigestion, we have redefined risk management. The investment philosophy within our equity strategies is anchored in the belief that the best way to make money is not to lose it. In other words, downside protection and positive return asymmetry are the drivers of long-term performance. Our conviction is supported by academic research that shows that risk-efficient portfolios outperform their benchmarks in the long run.

Given our focus on reducing the risk of absolute losses independently of tracking error, our equity strategies can be used to gain standalone equity exposures or as building blocks that can complement an investor’s existing portfolio. They are ideally suited to investors dealing with liability management, risk-budget, capital preservation or absolute return objectives.

We offer both risk-managed, long-only equity strategies and an active factor allocation equity strategy. All are completely customisable to suit individual client needs. Clients can select their preferred level of active risk and/or implement a factor tilt, as required. We can also construct, integrate and manage a specific environment, social and governance (ESG) overlay across all our equity strategies.



RISK-MANAGED EQUITIES

Unigestion developed its core risk-managed equity strategy in the mid-1990s and today, we have the longest track record in the industry of running risk-managed equity portfolios. We currently manage USD 11.1 billion using this approach across both pooled funds and segregated mandates.

Our risk-managed equity strategy is available across a number of geographic regions/markets:

Global        –        Europe        –        US         –       Japan        –        Switzerland        –        Emerging Markets        –        Pacific

The objective of these long-only strategies is to outperform the respective benchmark over a full market cycle by 3% p.a., while reducing volatility by 30%. The strategies are always 100% invested in equities and are all managed using the same investment approach.

Due to our risk-managed investment approach, we would expect the strategies to outperform in both bear and range-trading markets, perform in line with the market during broad-based bull phases, and underperform during narrow thematic rallies.

In numbers: Equities at Unigestion

11.1bn

USD AUM
Risk-Managed
Equities


22

Years’
Track Record


27

Investment
Professionals


Source: Unigestion, as at 31 March 2019

Key competitive strengths

  • Unigestion is a pioneer in applying risk management as a means to outperform
  • Our investment process has been continuously refined and improved since its inception in the mid-1990s
  • Instead of just focusing on past volatility, we control a full spectrum of risks, including ESG
  • We combine sophisticated systematic analysis with human insight
  • Our strategy is available via pooled funds and specific mandates which allow considerable potential for client customisation



Investment approach

Risk is not static. It is complex and multi-dimensional. We look beyond traditional measures, such as volatility and correlation, and adopt a 360-degree perspective to construct risk-efficient portfolios with low downside risk and an optimal diversification profile. We seek to model, analyse and map the broadest possible spectrum of risks to target remunerated risk and avoid unrewarded risk, with the aim of delivering strong risk-adjusted returns. This explains why our strategy significantly differs from passive low volatility strategies constructed on a purely mechanistic basis, which can be affected by hidden sources of risks that are not captured by common statistics. With a strong focus on research and innovation, we are able to identify potential sources of future risks early and adjust our portfolios as necessary.




Five key benefits of our 360-degree approach





  • Risk focus: focusing on risk rather than expected returns enables us to capitalise on downside protection in difficult markets to generate long-term outperformance
  • Discretionary portfolio assessment: focusing on valuation, fundamental risk control, corporate governance and any qualitative risks associated with potential portfolio stocks
  • Avoidance of behavioural biases: our investment process objectively favours lower-volatility and uncorrelated stocks, while avoiding overvalued success stories
  • Performance asymmetry: by concentrating risk reduction on unrewarded risks, we reduce the negative tail of return distribution while creating a positive skew
  • Downside protection: we focus on reducing the risk of loss and ensuring optimal diversification by using a range of different risk models and through discretionary scrutiny of candidate stocks

 



Equity Factor

Our multi-factor equity strategy is global and is built with a diversification constraint in order to reconcile the effectiveness of factor returns within a disciplined risk management framework. It uses an innovative investment approach, which adds value through dynamic allocation to five equity risk premia:

  • Value
  • Momentum
  • Quality
  • Size
  • Low risk

Equity risk premia are enhanced by a dynamic risk-based factor weighting scheme, which is based on proprietary macro and style indicators. The strategy has been expanded to include both long-only and long-short versions, as standalone products and within multi asset strategies.

Integrating ESG criteria

We integrate Environmental, Social and Governance (ESG) criteria into our equity strategies at various stages of the investment process. We eliminate stocks with important, specific ESG risks such as environmental, excessive carbon emissions, workforce treatment or corporate governance issues, legal problems or fraud. We also exclude stocks with direct exposure to controversial weapons. In addition to internal qualitative research, we also use external ESG research to validate our equity portfolios on an ongoing basis.

Unigestion takes its responsibilities as a shareholder very seriously. We believe in the importance of being an active shareholder and, in 2018, we voted on 90.2% of 10,001 votable items. We voted against management on 10.6% of the votes we cast.













Geneva

UNIGESTION SA 8C Avenue de Champel PO Box 387 1211 Geneva 12 Switzerland +41 22 704 41 11 clients@unigestion.com


Zürich

UNIGESTION SA - Zürich Branch Sihlstrasse 20 8021 Zürich Switzerland + 41 44 220 16 00 clients@unigestion.com


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