Active investment manager Allianz Global Investors is celebrating the fifth anniversary of the launch of its Allianz RiskMaster Multi Asset strategy.
Launched in response to the Retail Distribution Review, the RiskMaster strategy aims to deliver returns that are directly commensurate with three distinct investor risk profiles: Conservative, Moderate and Growth.
Five years later, the funds have met their objectives of delivering cumulative returns of 38.81 per cent, 47.19 per cent and 55.98 per cent respectively, while targeting a precise volatility bandwidth as defined by Distribution Technology (DT).
Managed by senior portfolio manager David Hollis (pictured), the strategy has returned 9.2 per cent each year, on an annualised basis since its launch in May 2012. Each fund targets defined levels of volatility across asset classes, using a variety of investment techniques including diversification and tactical asset allocation.
The RiskMaster funds demonstrated particularly strong performance through 2016, a year dominated by political upset. Over the last 12 months, the funds returned between 16 per cent and 22 per cent across the range.
This is because the Allianz RiskMaster funds target ‘realised’, as opposed to ‘expected’ volatility. As the latter is calculated simply by projecting forward long-term average trends in risk and return, it fails to account for any short-term changes in volatility. However, it is these short-term changes which are crucial for improving investors’ risk-adjusted realised returns.
By using realised volatility, Hollis and the team have been able to decrease market exposure when volatility picks up and increase it when volatility remains suppressed. This process means the Allianz RiskMaster funds have consistently met their volatility objectives across the market cycle.
Hollis says: “Over the last five years, the Allianz RiskMaster funds have played a key role in helping clients secure returns at risk levels they are happy to take. Yet for the last nine years, central banks around the world have suppressed volatility by buying up bonds, with the result that some clients were simply taking far too little risk to achieve their returns. Looking forward, as quantitative easing slows down and central bank balance sheets start to shrink, investors without the right kind of active strategy may find that all too soon they have the exact opposite problem.”
Assets under management (AUM) across the range are now over GBP379 million.
