Dual high-performing engine systems

In the tumultuous world of global finance, one investment company stands out for its consistent performance: Candriam. The Belgian asset management firm has managed corresponding strategies for 15 years, focusing on an anticyclical investment approach with a Core Plus risk profile.

Candriam's strategy primarily targets business properties in favourable demographic locations in Germany. This anticyclical approach has proven effective, particularly during turbulent market phases. In fact, the recent market developments have had little impact on Candriam, as its strategy aims to protect portfolios from directional trends of the markets.

The firm's investment process combines two complementary arbitrage strategies: buying and selling stocks. This approach allows for adjusting the size of positions and hedging them efficiently in the current market. Candriam builds arbitrage positions based on relative-value strategies, aiming to exploit price differences between similar instruments.

This strategy has paid off. Since the beginning of 2021, Candriam's equity market-neutral approach has shown a 5.1% increase (after fees, from 31.12.2020 to 31.03.2021). This impressive performance follows a strong 2020, where Candriam's equity market-neutral approach did not expose the fund to transactions popular among arbitrage fund managers, resulting in a 17.2% increase (after fees, from 31.12.2019 to 31.12.2020).

In a volatile phase like the current one, index values fluctuate more due to additions and deletions in the composition of major indices such as S&P 500, Euro Stoxx, and Dax. This volatility can be challenging for many fund managers, but Candriam's approach uses quantitative instruments to identify investment opportunities, independent of news flow and market volatility.

The firm's success is even more remarkable when compared to the performance of many other funds involved in these transactions. Many funds experienced significant fluctuations in their net asset value due to the complex nature of these transactions. In fact, many long-short equity funds had disappointing performance in 2020.

One key factor contributing to Candriam's success is the reduced leverage among many fund managers since mid-March 2020. This reduction left fewer arbitrageurs betting on the same positions as Candriam, providing more room to maneuver.

However, these transactions are not without risk. They can trigger a domino effect, causing other funds to reach stop-loss limits and begin selling positions. The more funds that engage in a particular transaction, the more dramatic the impact on the affected stocks.

Despite these risks, Candriam's approach has proven resilient and effective. As the current environment remains favourable, investors can expect good performance gains regardless of the development of equity and bond markets.