Threadneedle (Lux) Euro Dynamic Real Return

An actively managed solution

The Threadneedle (Lux) Euro Dynamic Real Return is a long-only, actively managed multi-asset fund that targets a real return of 4% above EU inflation (CPI), with up to two-thirds of equity volatility1.
1 EU inflation is defined as the Monetary Union index of consumer prices (MUCIP). Please note that the performance target may not be attained. The performance target is gross of fees.

Three-year anniversary

The fund is celebrating its three-year anniversary, having been launched on 30 April 2018. For this occasion, its Fund Manager, Maya Bhandari, has been interviewed by Felicity Long, Client Portfolio Manager of the multi asset desk. Together they discuss how the fund has navigated through these three years and explains how the fund is positioned today.

Why multi-asset real return funds?

The simple premise behind multi-asset real return funds is to deliver positive returns above inflation in line with the long run return of equities, but with significantly less risk – by diversifying portfolios across a number of uncorrelated asset classes.

While equities may continue to deliver good returns over the longer term, they are volatile and can suffer significant drawdowns. Core government bonds meanwhile, with interest rates set to remain low, are challenged in providing effective diversification and offer low prospective risk-adjusted returns.

Therefore, having a specialist multi-asset manager that looks to allocate dynamically between and within a wide range of uncorrelated asset classes, participating in growth opportunities while minimising drawdowns, should enhance the overall returns per unit of risk.

It is this combination of long-term capital growth potential with less volatility and protection against inflation that lies behind the appeal of multi-asset real return funds.

Reasons to invest

Proven capabilities in asset allocation

The fund benefits from a collaborative approach bringing together some of our most experienced investors and harnessing the best ideas from across our investment platform.

Follows a dynamic investment approach

The fund is dynamically managed, with no neutral allocation and no index constraints, so it reflects our best asset allocation ideas. Importantly, the portfolio can also be zero-weighted in any asset class, so each position must earn its way into the portfolio based on both its standalone risk and return characteristics and how it interacts with other positions in the portfolio.

Focus on volatility control

Diversification is embedded into the portfolio construction process, with a focus on providing strong risk-adjusted returns, whilst controlling overall volatility. The ability to ‘look through’ to every underlying position.

Investment approach

The Fund seeks to deliver a real return in line with EU inflation (CPI) +4% per annum over a 3-5-year period with up to two thirds the volatility of global equities. We aim to achieve this by dynamically changing the portfolio risk budget using a long-only unleveraged approach – investing in passive products or internal strategies to gain exposure to idiosyncratic corporate level risk (e.g. equities, corporate bonds, property), but directly managing the government bond and currency allocations.
The asset allocation is managed across the risk spectrum, from times where we want to protect investors’ capital to those when we want to participate in risk markets, in the belief that taking risk will be well rewarded. We can be zero-weighted in any asset, and there is no ‘neutral’ allocation, therefore every investment position needs to earn its way into the portfolio from a risk and return perspective. We manage this strategy using a three-stage investment process, which is outlined in the chart below:

Proven and repeatable investment process

Investment approach

Performance tables - (LU1734044768)

Available asset classes

Share classes available

Documentation

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Opportunities in multi-asset real return funds

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Fund profile – Threadneedle (Lux) Euro Dynamic Real Return

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Fund Snapshot – Threadneedle (Lux) Euro Dynamic Real Return

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Factsheet – Threadneedle (Lux) Euro Dynamic Real Return

About the portfolio manager

Maya Bhandari has over 15 years investment experience and has managed the Threadneedle (Lux) Euro Dynamic Real Return since inception. Maya is responsible for managing and co-managing a range of multi-asset portfolios, as well as providing strategic and tactical input to the company’s asset allocation process.

Key risks

Investment in Funds: The Investment Policy allows the fund to invest principally in units of other collective investment schemes. Investors should consider the investment policy and asset composition in the underlying funds when assessing their portfolio exposure.
Investment Risk: The value of investments can fall as well as rise and investors might not get back the sum originally invested.
Currency Risk: Where investments are in assets that are denominated in multiple currencies, or currencies other than your own, changes in exchange rates may affect the value of the investments.
Issuer Risk: The Fund invests in securities whose value would be significantly affected if the issuer refused, was unable to or was perceived to be unable to pay.
Liquidity Risk: The Fund holds assets which could prove difficult to sell. The Fund may have to lower the selling price, sell other investments or forego more appealing investment opportunities.
Inflation Risk: Most bond and cash funds offer limited capital growth potential and an income that is not linked to inflation. Inflation is likely to affect the value of capital and income over time.
Interest Rate Risk: Changes in interest rates are likely to affect the Fund’s value. In general, as interest rates rise, the price of a fixed rate bond will fall, and vice versa.
Valuation Risk: The Fund’s assets may sometimes be difficult to value objectively and the actual value may not be recognised until assets are sold.
Leverage Risk: Leverage amplifies the effect that a change in the price of an investment has on the Fund’s value. As such, leverage can enhance returns to investors but can also increase losses, including losses in excess of the amount invested.
Investment in derivatives: The investment policy of the Fund allows it to invest materially in derivatives.
Volatility Risk: The Fund may exhibit significant price volatility.

Important information

For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients). This is an advertisement.

Past performance is not a guide to future performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Your capital is at risk. Please note that the performance target may not be attained.

 

INVESTORS SHOULD CONSIDER THE RISKS THAT MAY IMPACT THEIR CAPITAL BEFORE INVESTING AND CONSULT A FINANCIAL ADVISER IF THEY ARE IN ANY DOUBT ABOUT THE SUITABILITY OF AN INVESTMENT.

 

Threadneedle (Lux) is an investment company with variable capital (Société d’investissement à capital variable, or “SICAV”) formed under the laws of the Grand Duchy of Luxembourg. The SICAV issues, redeems and exchanges shares of different classes. The management company of the SICAV is Threadneedle Management Luxembourg S.A, who is advised by Threadneedle Asset Management Ltd. and/or selected sub-advisors.

 

Certain sub-funds of the SICAV are registered in Austria, Belgium, Denmark, France, Finland, Germany, Hong Kong, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, Macau, the Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UAE and the UK; however, this is subject to applicable jurisdictions and some sub-funds and/or share classes may not be available in all jurisdictions. Shares in the Funds may not be offered to the public in any other country and this document must not be issued, circulated or distributed other than in circumstances which do not constitute an offer to the public and are in accordance with applicable local legislation.

 

Shares in the Funds may not be offered, sold or delivered directly or indirectly in the United States or to or for the account or benefit of any “U.S. Person”, as defined in Regulation S under the 1933 Act.

 

Het compartiment is op grond van artikel 1:107 van de Wet op het financieel toezicht opgenomen in het register dat wordt gehouden door de Autoriteit Financiële Markten. / Pursuant to article 1:107 of the Act of Financial Supervision, the subfund is included in the register that is kept by the AFM.

 

Threadneedle (Lux) is authorised in Spain by the Comisión Nacional del Mercado de Valores (CNMV) and registered with the relevant CNMV’s Register with number 177.

 

This material is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services.

 

This webpage is not investment, legal, tax, or accounting advice. Investors should consult with their own professional advisors for advice on any investment, legal, tax, or accounting issues relating an investment with Columbia Threadneedle Investments.

 

Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document, as well as the latest annual or interim reports and the applicable terms & conditions. Please refer to the ‘Risk Factors’ section of the Prospectus for all risks applicable to investing in any fund and specifically this Fund. Documents other than KIIDs are available in English, French, German, Portuguese, Italian, Spanish and Dutch (no Dutch Prospectus). KIIDs are available in local languages. Documents can be obtained free of charge on request by writing to the management company at 44, rue de la Vallée, L-2661 Luxembourg, Grand Duchy of Luxembourg, from International Financial Data Services (Luxembourg) S.A. at 47, avenue John F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg, from www.columbiathreadneedle.com and/or from in Austria from Erste Bank, Graben 21 A-1010 Vienna;- in Belgium: CACEIS Belgium S.A., avenue du Port 86 C b 320, 1000 Brussels- in France from CACEIS Bank, 1/3 Place Valhubert, 75013 Paris; – in Germany from JP Morgan AG, Junghofstr. 14, 60311 Frankfurt;- in Sweden from Skandinaviska Enskilda Banken AB (publ), Kungsträdgårdsgatan, SE-10640 Stockholm, Sweden;- in the UK from JPMorgan Worldwide Securities Services, 60 Victoria Embankment, London EC4Y 0JP.

 

Please read the Prospectus before investing.

 

The mention of any specific shares or bonds should not be taken as a recommendation to deal.

 

The analysis included on this website has not been prepared in accordance with the legal requirements designed to promote its independence and have been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable, but its accuracy or completeness cannot be guaranteed.

 

Threadneedle Management Luxembourg S.A. Registered with the Registre de Commerce et des Societes (Luxembourg), Registered No. B 110242, Vallee Park, 44 Rue de la Vallée, Luxembourg, L-2661, Grand Duchy of Luxembourg.

 

In the UK issued by Threadneedle Asset Management Limited. Registered in England and Wales, Registered No. 573204, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority.

 

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.