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Alternative UCITS funds to counteract volatility

Alternative UCITS funds to counteract volatility

In the following macroeconomic scenario, the hypothesis of volatility always applies in the context of investments.

However, in order to combat this phenomenon, there are several tools that allow us to minimize its impact and to deploy a sensible diversification strategy with respect to invested assets.

This category includes UCITS funds (Undertakings for Collective Investment in Transferable Securities), which are investment bodies whose definition dates back to December 20, 1985, when the EU laid the foundation for creating a single market for retail investment funds, guaranteeing an instrument of high protection for investors.

In fact, these funds have characteristics to offer various benefits, including obligatory asset diversification and the guarantee that the assets will be held at an independent third-party bank, and with the structure of a hedge fund.

The recent harmonization of community norms back in 2009 confirms that this product is characterized by great transparency, in line with European regulations, without losing its typical hedge.

For example, the absence of the reference benchmark allows the manager to work with greater flexibility.

Through various protection options, this investment format was actually designed to be dedicated to a clientele that is not purely institutional concerning the type of leverage and tools used.

The result is an alternative investment format which allows further diversification of its portfolio compared to traditional asset classes, and gets returns that are uncorrelated to the market, protecting itself from volatility.

Today, UCITS products, and in particular the funds under Luxembourg law which are considered the most sophisticated by market insiders, enjoy a solid global reputation and are intended for international distribution.

After two years setting up and a careful selection of products and strategic partners, we are also ready at Olympia with this kind of solution, representing an absolute novelty to the Italian market.

Stefano Bettinelli
Senior Analyst and Portfolio Manager