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Sycomore Partners: an unconstrained approach

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In the light of the high volatility of past months, let’s look at Sycomore AM fundamental analysis and the unconstrained approach offered by our flagship fund Sycomore Partners.

Emeric Préaubert

What is the outlook for European equities?

In recent quarters, the volatility on equity markets has been particularly high. The Eurostoxx Index TR has lost 20.5% between April 15th 2015 and January 20th 2016 (1). The global environment remains tense, even in Europe, where companies have recently exhibited some attractive fundamentals in relative. In this context, finding a compelling asset class that offers upside potential and limited risk is quite a challenge.
However, we believe equities to be the most attractive asset class. “There is no alternative” as the saying goes, and the European stock market remains the lesser evil.

We believe equities to be the most attractive asset class. “There is no alternative” as the saying goes, and the European stock market remains the lesser evil.

Sycomore AM’s approach to European equities

As an independent asset manager, we put strong emphasis on groundwork and on-site visits: in 2015, our team of 14 portfolio managers held more than 1,600 meetings with top management teams. Our approach also offers a 360 degree perspective by engaging in further discussions with each company’s stakeholders. As a result, the five pillars of shared value analysis – Society, Suppliers & State, People, Investors, Clients and Environment – are taken into account in our fundamental analysis. We strongly believe that value creation is sustainable only if it is shared amongst all stakeholders. We have therefore developed a collaborative proprietary research tool, SycoValo. This tool gathers all data and information that has been collected by our team of portfolio managers over the past 15 years. In turn, companies are assessed at their fair value. A target price is set for each holding in the portfolio, and serves as a guide for our daily management.

This investment philosophy is designed to limit downside risk while containing volatility.

An alternative solution for navigating the current environment

The Sycomore Partners fund is a European equity strategy managed with an “unconstrained” approach. The fund’s exposure to equity markets can range from 0 to 100%, with no market capitalization, country or sector bias. When not fully exposed to the market, the Sycomore Partners Fund invests in cash and waits for better entry points.
This investment philosophy is designed to limit downside risk while containing volatility. In the course of 2015, the Sycomore Partners Fund posted an average volatility of 6.7% versus 21% (2) for the Eurostoxx Index TR.
Unlike traditional asset allocation funds, the Sycomore Partners fund is managed according to a bottom-up approach driven by in-depth fundamental analysis. The fund does not invest in corporate bonds. Simplicity is the key: the portfolio is concentrated across our 25 strongest convictions; the fund managers react very swiftly to adjust equity exposure and are particularly selective when picking stocks. This disciplined approach has enabled the Sycomore Partners Fund to post returns of +8.1% (3) in 2015.

Download our pdf version of the article

(1) Source: Bloomberg
(2) Source: Bloomberg
(3) Data as of 12.31.2015, IB Share Class

Sycomore Partners Risk Profile

Past performance is not a reliable indicator of future returns. The fund does not guarantee returns or performance and might entail capital loss. Before investing, please consult the Key Investor Information Document (KIID) for each fund which is available on our website. This communication should not be considered as an investment offer. This fund complies with the 2009/65/EC European directive and is authorized for public sale in France, Germany, Spain, Austria, Italy, and cannot be offered for sale in other countries.

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