Unigestion Launches New Actively-Managed Risk Premia Fund

Feb 28 2017 | 9:38pm ET

Boutique asset manager Unigestion has launched a new alternative risk premia fund that aims to provide cost-effective, liquid sources of returns modestly correlated to equity and bond markets.

The new fund, named the Uni-Global – Alternative Risk Premia, complements the company’s existing family of direct alternative offerings. These include the Uni-Global – Cross Asset Trend Follower, Uni-Global – Alternative Equities Compass World, the Unigestion Long/Short Global Opportunities and the Uni-Global – Absolute Return funds.

The new strategy addresses three major concerns for investors and the asset management industry, Unigestion said in a statement:

  • Expected returns for traditional investments are not very attractive, as bond yields remain at historically low levels while equity valuations are stretched 
  • Macroeconomic and political risks could trigger a surge in volatility
  • The typical cost structure imposed by hedge funds is in general not commensurable with the returns they are delivering

Unigestion’s strategy distills the sources of hedge fund returns in a more cost-effective way and identifies relevant risk premia among equity factors (value, quality, size and momentum), carry (extracting the excess yield of assets with higher income streams vs. lower income streams) and trend following (the tendency for trends to exhibit persistence). 

Adding Unigestion’s proprietary risk models, which dynamically allocate between different premia based on macro risk, and defining the most efficient capital allocation creates balanced exposure to macroeconomic regimes and produces an alternative return stream with low correlation to equities and bonds, the company said. 

The strategy will target annual returns of cash +7% gross of fees over a 3-5 year investment horizon, and is designed for daily liquidity within a UCITS structure. The strategy also seeks to limit volatility to 8%, potentially providing smoother risk-adjusted returns for investors, Unigestion said. 

Unigestion’s Luxembourg-domiciled SICAV is comprised of 13 subfunds spanning equity, private equity, absolute return and alternative risk premia strategies. The Geneva-based firm was founded in 1971 and manages $23 billion across equity, multi-asset investing, private equity, and alternatives. 

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