The Fund's target is to generate attractive risk-adjusted returns over time. The Fund's long-term risk level is expected to be around 8%, measured by annual volatility, which corresponds to the risk of a traditional balanced fund holding 60% equities and 40% fixed income.
The overarching investment principle is to allocate risk instead of capital across and within asset classes. This implies that low risk assets such as fixed income may receive a higher nominal exposure than relatively higher risk assets such as equities. The capital weighted approach, an investment technique used by the majority of balanced funds, usually leads to a concentration in equity risk which can have a significant negative impact during market downturns. Risk weighted portfolios tend to offer a more even distribution of risk and increased portfolio diversification, reducing the dependency on the performance of a particular asset class.
The Fund can be very active increasing and decreasing risk across markets. As an example, the exposure in equity indices can range from 0 to 100%. As investments are made using derivative instruments, desired exposures can be achieved in an efficient and cost effective way.
Systematic models and techniques that have been developed and tested for almost 20 years in the company's flagship strategy, the Lynx Programme, have now been revised and adapted to fit the Lynx Active Balanced Fund. The investment process is fully automated and founded on sophisticated quantitative analysis, rigorous risk control and efficient trading techniques.
Investors should note that the use of derivatives may lead to exposures exceeding 100% of the Fund's NAV. For further description of the investment process and associated risks, please refer to the Fund's Prospectus and the Fund's Supplement to the Prospectus.