Fisch Asset Management’s absolute return strategies cross the CHF 1 billion threshold

Absolute return strategies at Fisch Asset Management – the Swiss specialist for convertible bonds, corporate bonds and absolute return solutions – broke through CHF 1 billion in client assets during the second quarter of 2020. This accomplishment was driven by the stable performance of Fisch’s absolute return strategies during the Covid-19 crisis, which differ from mainstream strategies, as they are based on high yield and convertible bonds.

“We are delighted with the tremendous success of our approach with institutional investors and the crossing of this symbolic threshold. Active management and effective portfolio diversification are key to investing successfully, as has been confirmed even during the current extraordinary circumstances of Covid-19. Absolute return strategies should therefore form the cornerstone for all portfolios”, said Robert Koch, Senior Portfolio Manager for Absolute Return/Multi Asset at Fisch Asset Management.

Attractive absolute return strategies with high yield and convertible bonds offer equity-like returns

“Our absolute return strategies target high risk-adjusted returns in all market environments. We therefore focus on stable returns and achieve this through liquid portfolios that bear low concentrations of risk. This reduces the timing risk, i.e. that investors enter or exit at unfavourable times. Consequently, Fisch Asset Management focuses on its competencies in high yield and convertible bonds and therefore offers a unique approach. Both asset classes generate equity-like performance, but with higher risk-adjusted returns thanks to their lower volatility. They also offer investors additional alpha generation potential”, added Robert Koch.

Stabilisers have been effective during the crisis

Actively managed stabilisers that are inherent to Fisch’s absolute return strategies work especially well in periods of crisis, such as the current one we were in. Top quality government bonds and trend-following strategies are negatively correlated to economic premiums in times of market stress and are, therefore, able to stabilise the portfolio.

“We are delighted that this strategy proved effective and has led its Morningstar peer group year-to-date. During the correction, reduced exposure to convertible and high yield bonds lessened equity risk, which had a positive impact. The strategy’s trend-following allocation also served to limit losses. Another important performance driver was a targeted increase in equity exposure in late March. This left the portfolio well-placed to ride the market rally. Consequently, losses suffered year-to-date were made back by the end of May, and by July the portfolio had passed a new high water mark. Rising demand has been accompanied by a shift in the investor’s mind-set: Investing successfully is a marathon and not a sprint, and by focussing on avoiding losses, our absolute return approach creates exactly the prerequisites for attractive returns” .