Ukraine Crisis and Investment: Risks or Opportunities

Commercial document. Before making a final investment decision, please refer to all the characteristics and objectives of the fund available in the prospectus and key investor information documents.

In this unprecedented situation where Russia’s invasion of Ukraine is having a significant impact on the global stock market, Dorval Asset Management’s management evaluates financial market outlook and flexible fund management behavior.

What is the diagnosis of the situation after the impact of the Ukrainian aggression?

Raw material prices and availability are the main transmission channels of the Ukrainian crisis to the world economy. Europe is particularly vulnerable because it relies on Russian gas, but rising prices for oil and other raw materials (wheat, palladium, titanium, etc.) have globalized the economic shock. Therefore, above $ 110/120 per barrel of oil will have a significant impact on even the US economy.

With the exception of China, monetary policy cannot easily respond to the shock of inflation. However, real interest rates (excluding inflation) are very low, even negative in developed countries, allowing new budget efforts to be funded. Therefore, crisis resilience plans will be deployed in Western countries.

At current prices (March 7, 2022), financial markets are not too far to anticipate a global recession, the stock market risk premium rises very sharply, and credit spreads widen sharply. doing. Therefore, even very relative declines in military and / or sanctions can enable the price stabilization or even rise of risky assets at uncertain times.

What management policies are implemented in Dorval Asset Management’s international flexible management?

Since the beginning of 2022, Dorval AM’s international management has adopted a modest equity exposure rate in response to the maturity of the stock market cycle. The crisis in Ukraine has led to a reduction in portfolio risk in two stages.

Immediately before the intrusion, more defensive positioning was implemented, reducing equity risk from 43% to 35% for dynamic funds (Dorval Global Convictions) and from 20% to 15% for low risk (Dorval Global Convictions Patrimoine). bottom. Through hedging the European portion of the portfolio.

Second, soaring prices per barrel have allowed us to further reduce our exposure through extended hedging in the United States and Japan to address the risk of an extended crisis due to energy shocks. The US 30-year debt (safe shelter asset) position in dollars completes the protection of the portfolio. However, we remain exposed to the theme of green recovery. This theme has been further strengthened by the energy crisis.

The fund’s behavior is in line with what is expected of these strategies in the event of a crisis, especially the Dorval Global Convictions Patrimoine (R share as of Friday, March 4), down only 2.12% from the beginning of the year. .. ).

How can you quickly redistribute your portfolio in this context of a very volatile market?

Individual and professional investors know that strong stock market volatility creates a daunting dilemma in the timing of investments or withdrawals and the responsiveness to implement their allocation strategies.

With flexible management, these questions are first screened by an analysis of numerous economic, financial and psychological parameters. To do this, it is essential to rely on highly experienced economists and managers who have had the opportunity to face many crises in their careers. This is the case for Dorval Asset Management’s flexible fund managers, with Louis Bert, Sophie Chauvellier, François-Xavier Chauchat, Gustavo Horenstein and others having 20 to 35 years of experience, respectively.

In addition, flexible management enables quick response times and cheap mediation. This would be of great benefit, for example, if the stock market recovered significantly in one day (+ 7.6% for CAC40!) After the announcement of the vaccine against Covid-19 on November 9, 2020. .. Flexibility management allows individual investors to quickly intervene through specific tools of listed derivatives (future and options) that are not easily accessible.

The flexible and SRI-labeled scope of Dorval Asset Management corresponds to each client’s risk profile.

  • Dorval Global Convictions Patrimoine (of global equities) for investors seeking returns within the risk range measured between SRRI3 and SRRI4, thanks to a portfolio of global diversification and evenly weighted values ​​(approximately 300). 0-30% in baskets, 200 average up to 300 rows) and Dorval Global Convictions (0-60% in baskets of global equities, average 200-300 rows);
  • We offer Dolbal convictions (0-100% for European equities, average 50 lines) for investors seeking SRRI Level 5 risk envelope and greater exposure to European equities.

The funds mentioned are exposed to certain risks, especially the following risks: equity risk, currency risk, interest rate risk, credit risk, risk associated with the use of financial derivative products and sustainability risk. Before making a final investment decision, please refer to all the characteristics and objectives of the fund available in the prospectus and key investor information documents. The invested capital is not guaranteed.

As with any investment, funds managed by Dorval Asset Management are at risk of capital loss and the amount of the investment is not guaranteed.

References to rankings, labels, prices and / or ratings do not predict future outcomes of the latter / fund or manager.

Dorval Asset Management shall not be liable for any decisions made or not made based on the information contained in this document or for use by third parties. The UCITS mentioned are licensed for marketing in France and, in some cases, other countries permitted by law. Before making an investment, it is advisable to check if an investor is legally permitted to join UCITS. The characteristics, cost, risk and return profiles associated with investing in UCITS can be found in the UCITS Key Investor Information Document (KIID). KIID and recurring documentation are available free of charge upon request from Dorval Asset Management. Before you subscribe, you need to read the KIID that must be given to you. The definition of risk indicators in this document can be found at the following website: www.dorval-am.com.