ODDO BHF Polaris Moderate, rated 5 stars by Morningstar, a fund proving resilient in the face of the Corona crisis
April, 30, 2020
ODDO BHF Polaris Moderate, rated 5 stars by Morningstar1, a fund proving resilient in the face of the Corona crisis
The recent market turmoil has put a strain on multi-asset funds and in particular on their ability to quickly adapt their asset allocation to sudden changes in prices. Amid this environment, the defensive flexible fund ODDO BHF Polaris Moderate has seen its performance hold up particularly well. The fund aims to avoid major price setbacks through a flexible allocation into equities (generally ranging between 0 and 40%) and to generate superior returns to that of a bond investment
At the end of March 2020, the fund was rewarded for its good results with five stars from Morningstar1 and has also seen positive inflows of more than EUR 50 million year to date, taking its total assets to over EUR 800 million.
According to its portfolio manager, Peter Rieth, the fund’s core strength is its flexibility combined with active risk management in times of crises. "In late February, when stock markets were highly volatile, we used futures to reduce equity market exposure to around 20 percent of the portfolio," Rieth explains. "From mid-March onwards, we moved back into equities with the aim of participating in the recovery phase". Hence, the fund has clearly outperformed its benchmark and most other funds, down only 4.0 % year to date (as of April 15th 2020, DRw-EUR share class) compared to an average loss of -6.8% posted by the funds in the relevant Morningstar1 category and of -4.4% posted by the benchmark. Since 30 March, Morningstar has rated the fund with five stars.
The fund’s equity investments are focused on companies that in our view have been only slightly affected by the Corona crisis or even benefit from the current environment. Emphasis lies particularly on companies from the IT and healthcare sectors, while automobile manufacturers, banks and commodity stocks are not represented in the portfolio.
While short-term risk management serves the purpose of stabilization, securities are only acquired with a medium to longterm perspective. In the case of equities, the focus is on quality companies from Europe and the USA that are characterized by stable growth prospects and low vulnerability to market fluctuations. In the current environment, attention is particularly centred on aspects of resilience shown by these companies in the face of economic or exogenous shocks. "After sharp falls in the markets, our portfolios proved to be robust and recovered quickly, particularly due to our quality-oriented stock selection", Rieth emphasizes.
In the portfolio’s bond pocket, in view of negative interest rates for government bonds, he focuses on carefully selected investment-grade bonds from companies with solid balance sheet figures. "Following the announcement of the ECB purchase programme, which also covers corporate bonds, we have reduced our liquidity in recent weeks in order to enter into bonds from stable issuers at conditions we consider as attractive," explains Rieth. Finally, a position in gold, which was in high demand due to the crisis, also contributed to the fund’s resilience.
ODDO BHF Polaris Moderate belongs to the multi-asset fund range ODDO BHF Polaris comprising investment funds catering to different risk profiles (defensive, balanced, flexible, dynamic). These funds are advised or managed since more than 15 years by ODDO BHF Group’s wealth manager ODDO BHF TRUST GmbH. ODDO BHF TRUST GmbH was awarded in Germany the title of best wealth manager over 1 and 5 years by independent ranking institute Firstfive in February 2020 for the fourth consecutive year. Firstfive rates wealth managers of private banks.Past performance is not a reliable indication of future return and is not constant over time.
Peter Rieth, CFA
ODDO BHF TRUST GmbH
1Morningstar category: EAA Fund EUR Cautious Allocation
» For more information, visit ODDO BHF Polaris Moderate Fund’s page.
Annual performance in % (12 months rolling)2
ODDO BHF Polaris Moderate - DRW
03/15 - 03/16 (including issue surcharge)4
03/15 - 03/16
03/16 - 03/17
|03/17 - 03/18||-0.9||0.4|
|03/18 - 03/19||3.3||2.5|
|03/19 - 03/20||-2.8||-1.0|
Past performance is not a reliable indication of future return and is not constant over time. The fund is exposed to a risk of capital loss.
2 The basis for calculating the reported performance is the net asset value (excluding initial sales costs); distributions and taxes payable to the tax authorities have been reinvested.
3 Benchmark: 20% Stoxx Europe (NR), 60% JPM EMU Investment Grade 1-10 years, 20% JPM Euro Cash 1M.
4 In addition to the costs incurred at fund level, individual costs incurred at customer level were also taken into account. One-time front-end load of 5% to the issue price (= 50 euros with an exemplary investment amount of 1,000, - Euro). In addition, there may be incurred custody costs that reduce performance. Ongoing charges: 1.37%