LGT Equity Funds Global Sector Trends
a fund that uses a behavioural finance approach in portfolio allocation
Focus: Using a well rounded, disciplined approach that relies on observed market price information and systematic data analysis, trends in countries, sectors, industries and equities are identified. Economic sustainability of these trends is assessed and contributes to the investment process. Behavioural finance is applied to analyse various causes for the occurrence of these trends and considers issues such as - systematic cognition problems (patterns are transferred without empirical evidence), the incorrect or slow classification of new information (clinging onto old evidence or slow adjustment to new evidence), social contagion (subjective knowledge gaps, time pressure and the pressure to succeed generate uncertainty which is overcome by observing and imitating others). This collective process leads to stock picking and guides portfolio management.The fund seeks to beat its benchmark – the MSCI World –index – and to simultaneously maintain a tracking error of between 5-8% a year.
elaborates on what it means to be a niche player in the context of Asset Based Lending.
Risks and rewards of investing with a “niche” asset backed player.
How would you as a practitioner define a “niche” player?
I would define a “niche” player as someone who has access to a particular and specific competitive advantage. In asset-based lending (“ABL”) the manager will usually have a unique competitive advantage to originate deals within his/her particular area. “Niches” can be characterized as either geographic or collateral-specific or both. For example, someone may have access to finance timber receivables in Oregon. This is obviously a very “niche” opportunity with respect to both geography and collateral
Global Maritime Investments
achieves uncorrelated returns by investing in both the derivatives and the physical shipping market
Focus: it is the only fund to invest in both the derivatives and the physical shipping market. Currently focuses on the dry bulk market and on the Panamax sector as this is where the greatest volatility can currently be found and it offers the highest liquidity.
Developments: will start trading the Capesize and Handymax sectors as the fund grows. The fund has developed a software system around the proprietary freight portfolio management system, Neptune, which provides “comprehensive freight position management, complete forward pricing and allows the trading portfolio to be thoroughly risk managed”.
Biofuel Commodity Basket
an opportunity to invest in commodities that are used in the production of bio fuels
Focus: The Biofuel Commodity Basket was structured and weighted by analysing* the largest bio fuel producing countries and their corresponding commodity consumption for the purpose. Bio ethanol
production was capped at 70% in order to attain a meaningful representation of bio diesel; which represents the remaining 30%. Although bio diesel is not widely produced currently, the underlying commodities help achieve diversification. The basket’s actual underlyings are 8 certificates on futures contracts - sugar (33%), corn (28%), soybean oil (15%), wheat (6%), palm oil (6%), canola (5%), rapseed (4%) and soybean meal (3%).
*The data was drawn from the Renewable Fuels Association Industry Outlook 2005.