What is a Total Return Fund?
Total Return funds aim for a return that is independent of market development. This is to be achieved through active allocation between individual markets, regions, sectors or asset classes, thereby reducing risk upon negative market movments and allocation to more risk-averse assetclasses. The performance of the fund is therefore largely dependent on the ability of the fund managers or the technical trading system to assess the current state the market is in.
How does the Total Return concept work?
The ARTS Total Return concept represents a highly active management style, the composition of the portfolio is changing very frequently. Irrespective of the skill of a fund manager, the fund selection is carried out purely technically according to fully standardised, quantitative criteria. The trading system does not attempt to anticipate trends, but only invests once a positive trend has established. On a daily basis, the market is analysed for existing trends and purchase and sale decisions are triggered on basis of that assesment. From over 10,000 investment funds, ETFs and equities, the system selects the ones wih strongest trend-behaviour. Hence your money is always invested where it seems most profitable.
In bear markets the proportion of equity exposure can be reduced down to zero. In such phases the capital is largely invested in money market instruments, fixed income bonds with short maturity and investments with strong negative correlation to the classical stock indices. Security selection follows purely technical, fully standardised quantitative criteria independent of the skills of an individual fund manager.
Which funds are managed by the Total Return concept?
The Total Return concept is applied to almost all funds manged by ARTS Asset Management. The distinction between the individual funds lies primarily in the risk/return distribution. The dynamically oriented funds can invest up to 100% in equity funds, while with balanced funds, the maximum equity ratio lies at 50% or up to 60%. The defensive funds, whose equity quota can amount to a maximum of 30%, are the most conservative within the ARTS product family.
In a strongly negative stock market enviroment, the equity exposure can be reduced to zero in all total return strategies. In such cases, up to 100% is invested in both bond and or money market funds or near-money market funds.
Why a Total Return Concept?
After the recent volatile stock markets movements, many investors are uncertain about their future investment strategy: Which asset class do I choose? Shares, bonds or back to the saving accounts? When is the right time to start? How can I reduce risk without sacrificing returns?
The Total Return concept offers a solution for all these matters: In the event of a strong upward market (bull market), the focus is on investing in most promising equities or bonds for the purpose of yield optimisation = "attractive yield opportunities". In a negative stock market environment (bear market), a gradual shift to conservative investment instruments is made = "avoidance of long loss phases". However, temporary price losses resulting from short-term market corrections cannot be completely avoided.