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Watch out, correlation trap!
Our market access creates new options: Liquid Alternatives.

Deka-Liquid Alternative Strategies.

Get in touch!
+49 (0) 69 71 47 - 11 17

Investing in Liquid Alternatives enables you to effectively diversify your portfolio and make it more robust. Liquid Alternative Strategies are aimed at generating income independently of stock and bond market performance, thereby reducing portfolio-level risks.

 

The advantages of diversified Liquid Alternative Strategies.
 

Many investors have discovered that their traditional equity and bond portfolios correlated much more strongly than they expected. In the current period of low interest rates, the use of bonds to diversify equity price risks is becoming less attractive. There remain very few situations in which they make a positive contribution to returns.

Are you looking for new sources of return apart from equities and bonds?

Liquid Alternatives offer market-neutral returns. They combine alpha-driven strategies with alternative sources of income and dynamic risk approaches.

Are you seeking to make your portfolio more robust and ensure that it can still handle risk?

Liquid Alternatives allow you to add asymmetric risk/return profiles to your portfolio and diversify more efficiently.

Would you like to use strategies that exploit opportunities dynamically?

A rigorous selection process determines which alpha strategies make it into the portfolio. The decisive factors are persistence, transparency and cost efficiency.

Do you need strategies that deliver stable returns and actively manage risks of loss?

Volatile individual strategies are beneficial when positive diversification effects arise and for portfolio-level drawdowns can be reduced.

The strategy at a glance.
 

Investment universe

"Best in class" strategies from third-party managers from the Liquid Alternative and smart beta segment.

Benchmark

  • Absolute return approach without a benchmark
  • Target return: EURIBOR +4%*

Adding value

  • Mercer: Research and selection skills in alternative strategies with a high dispersion of returns depending on managers’ expertise.
  • Deka / Mercer: Selective inclusion of genuine alpha strategies where these offer added value in terms of risk-adjusted total return after costs. Emotion-free use of alternative beta strategies to optimise the price/performance ratio.
  • Deka / Mercer: Portfolio construction expertise in the management process to increase diversification returns through a clever combination of volatile individual strategies.

Investment objective

Long-term value growth, independent of market phase, with simultaneous management of overall risk, in particular reduction of volatility and tail risk.

Fund management

Neil Sturrock, Multistrategy Team

Investment process

  • Fund of funds invested in 8 to 15 UCITS funds
  • Rigorous, independent target fund selection based on Mercer’s comprehensive investment due diligence, with a clear focus on “best in class”.
  • Use of genuinely diversifying alpha strategies if the investment strategy is likely to add particular value after costs.
  • Pronounced portfolio construction including volatile individual strategies, with a clear focus on alternative sources of return that have a low correlation with traditional market beta, in order to take advantage of diversification returns.
  • Stringent risk management relating to the overall portfolio with a clear focus on reducing volatility and tail risks, with low market beta.

* There is no guarantee that the target return indicated will be achieved.

Liquid Alternatives can complement your portfolio.
 

Liquid Alternatives are investments that provide investors with access to alternative investment strategies in a regulated investment vehicle, and thus in ̈UCITS- compliant instruments.

Deka-Liquid Alternative Strategies comprises a large number of strategies that fulfil very different functions in the portfolio.

Multi-strategy

Positioning in a large number of asset classes and instruments.
• Tapping diverse sources of income
• Reducing market risk

Effect

Stabiliser

  • Stabilising effect in many but not all market phases

Long/short equity

Purchase of promising equities with simultaneous sale of equities with negative expectations.
• Reduction in general market risk
• Focus on relative performance of the long-short position

Effect

(Bottom up) return driver

  • Equity market exposure driven by fundamental analytics but with strongly controlled risk (beta ≈ 0.5).
  • Focus on individual securities or pairs, not on absolute performance.

(Global) macro

Very broad universe with large degrees of freedom.

  • Positioning based on macroeconomic developments in regions or countries (equities, interest rates, currencies, etc.)

Effect

(Top-down) return driver

  • Implementation of economic expectations in investments
  • Exploitation of imbalances and market distortions

Managed futures

Active trading of liquid and transparent instruments (long and short positions in futures) in a variety of asset classes in order to exploit trends.

  • Discretionary strategies
  • Trend-following strategies
  • Relative value strategies

Effect

Diversifier

  • Historically mainly good performance in times of stress due to long positions in safe-haven assets.
  • Earnings potential in markets trending upwards.

Deka and Mercer – strong partners for Liquid Alternatives.
 

The universe of Liquid Alternatives is much larger and more varied than that of traditional investments. An understanding of the factors that make for a promising investment can result in very attractive returns.

Mercer
 

 

 

Deka
 

 

 

A single investment process for all quality criteria.
 

Deka Investment and Mercer combine in-depth expertise in research, manager selection, portfolio construction and management, as well as risk management in a unique and stringent process. We work with Mercer, employing a unique investment process, to ensure that with our investment fund you can rely on excellent managers and benefit from our quantitative methods strength when combining and assessing asymmetric risks.

Good reasons for Deka-Liquid Alternative Strategies.
 

Significant risks

  • Correlation between investment managers may increase in the event of extreme market fluctuation.
  • The target funds may fluctuate considerably depending on the market phase. Increased volatility in a single strategy may cause the volatility of the entire portfolio to rise.
  • The return may be negative, depending on the market environment.

Get in touch.

Our specialists look forward to personally presenting our new Deka-Liquid Alternative Strategies to you, explaining its unique investment process in detail and answering any questions you may have. Give us a call or drop us a line.

 

Deka Institutionell – Vertriebsservice

Phone: +49 (0) 69 71 47 - 11 17

deka-institutionell@deka.de

This information is no substitute for personal consultation. The sole binding basis for the purchase of Deka investment funds is the relevant key investor information, prospectuses and reports, which are available in German from your savings bank or from DekaBank Deutsche Girozentrale, 60625 Frankfurt, Germany, and at www.deka.de.