The global tactical asset-allocation fund strives to offer greater diversification by integrating equity volatility as an asset class while investing in global stocks and bonds. Equity volatility can be used to manage risk or to seek returns in different types of environments (see “Investors Want Smarter Volatility Management”). This ability can be especially valuable to investors during market downturns, Natixis says.
David Giunta, president and CEO of Natixis, says the multi-asset-allocation fund can be used as a stand-alone core allocation capable of outperforming a benchmark of global equities and bonds, and can provide additional diversification in volatile markets.
The fund’s management team has an established reputation in dynamic asset allocation, Giunta adds. The fund is based on a strategy that seeks to generate value through asset allocation, rather than individual security selection. As a result, the management team invests in volatility as an asset class, including volatility index futures, and equity index options and futures.
“We do not simply use volatility defensively,” explains Frédéric Babu, senior portfolio manager for Natixis. “One common misperception of volatility is often akin to an insurance premium that can come at a high cost over the long term. Instead, the fund also uses volatility actively to extract value from volatility through the full cycle.”
Sam Richmond-Brown, head of client portfolio management at Natixis, believes the fund will be popular among retirement plan participants. “We believe that the Seeyond fund is well suited to appeal to a broad investor base, including retirement plan participants who are in search of long-term growth of capital from investments in a range of securities and asset classes across global markets,” he tells PLANSPONSOR.
Richmond-Brown adds that, while the expense of active asset-allocation planning can be a detriment to an investor’s long-term return, the opportunity to receive long-term capital appreciation through passive funds also presents its challenges.
“Our strong belief is that to overcome the challenges associated with short term bouts of uncertainty, we must first ensure that capital can be allocated dynamically over time based on a broad multi-asset investment universe that includes stocks and bonds,” he says.
— Matthew Miselis