THE NETHERLANDS
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BNP AM

The sustainable investor for a changing world

Target Risk Balanced Strategy

Key features

A global multi-asset portfolio that seeks to keep volatility around 7.50%

Managed by an experienced flexible and absolute return team

ESG1 integrated within the investment process

Investment philosophy 

We believe adapting the global risk budget of a multi-asset portfolio to the prevailing market context can add value. We identify market regimes by means of a tool (QuantNow) that incorporates macroeconomic factors, bottom-up indicators, and market data. The output of this tool is validated or overridden by our investment team.

We also think volatility targeting is one of the most reliable and useful tools for daily asset allocation. Our model allocates assets of a portfolio based on each asset’s volatility and acceleration of risk. It generates buy and sell signals designed to control volatility by maintaining its level close to a pre-defined risk budget.

Investment process

Our Target Risk Balanced Strategy follows a simple, repeatable, and robust process:

  • Selection of the market regime
  • Asset allocation
  • Selection of instruments

Team and resources

Our Flexible & Absolute Return team is based in London and Paris. Maya Bhandari, 15+ years of industry experience, and Mark Richards, 15+ years of industry experience, are the lead portfolio managers.

The team benefits from access to our global trading and risk management platform, Sustainability Centre, Quantitative Research Group, and Macro Research team.

[1] ESG = Environmental, Social and Governance. ESG assessments are based on BNP Paribas Asset Management’s proprietary methodology which integrates all three aspects of E, S & G.
References to the Strategy relate to the investment approach and process applied to the flagship BNP Paribas Sub-fund. The Sub-fund in question may not be available to investors in certain jurisdictions. Visit www.bnpparibas-am.com for more information.
Past performance or achievement is not indicative of current or future performance.
  • Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This material does not constitute investment advice.
Investments are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial investment. There is no guarantee that the performance objective will be achieved.
  • Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Environmental, social and governance (ESG) investment risk: The lack of common or harmonised definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, (the Sub-Fund's) performance may at times be better or worse than the performance of relatable funds that do not apply such standards.