Swiss & Global lists first actively managed equity ETFs on German stock exchange

The company is among the first providers to give investors access to actively managed equity portfolios in an ETF format, closing a gap in the European fund market.

Swiss & Global Asset Management’s new products are to be listed on the Deutsche Boerse in Frankfurt, as the first fully actively managed equity funds in the active ETF segment. The Julius Baer Smart ETF investment fund range comprises of the following four funds, due to start trading on 29 June 2012.

Each Julius Baer Smart Equity ETF holds up to 200 positions. The funds are UCITS IV compliant, fully invested in equities and do not use derivatives like swaps, futures or options. Securities lending and borrowing is not allowed, therefore investors are not exposed to any issuer or counterparty risk.

The Julius Baer Smart Equity ETFs combine the advantages of conventional exchange traded funds – transparency, cost efficiency and liquidity – with the inherent strengths of an active investment strategy. The ETFs use a systematic approach to invest in selected equities from their respective MSCI benchmarks, with each position subject to a qualitative check before implementation.

The funds aim to outperform their benchmarks by combining two proprietary systematic strategies in one portfolio to effectively exploit price trends and valuation anomalies:

• The systematic trend approach focuses on investment opportunities driven by the behaviour of investors. It exploits short and medium-term price anomalies by identifying trends and trend reversals based on technical indicators. The stocks are equally weighted.

• The systematic value approach focuses on stock valuation. It identifies and exploits price anomalies on the basis of medium and long-term valuation parameters. The stocks are weighted by market capitalisation.

The higher the risk-adjusted return as measured by the ex-post information ratio, the higher the respective pool’s weight in the fund.

Stefan Angele, Head of Investment Management at Swiss & Global Asset Management, says: “Swiss & Global is a dedicated active manager. These new products capitalise on our proven twenty-year track record in systematic stock picking and combine this expertise with the advantages of exchange traded products. This enables us to offer the transparent and liquid products many investors seek, at the same time eliminating some of the obvious weaknesses of purely passive index replication. ETFs have witnessed significant growth and have become an important part of the fund industry in recent years, so we feel that this major product innovation closes a gap in the European fund offering.”

Stefan Fröhlich, lead fund manager of the Julius Baer Smart Equity ETFs at Swiss & Global, adds: “The aim of our active strategy is to avoid and at the same time exploit the typical human errors in the investment process. These include temporary overreactions and the strong herd instinct of many investors. We select the stocks in a very systematic way based on strict rules that we have developed over a number of years. In addition, every position is also subject to a qualitative check by an experienced portfolio manager before implementation. For the first time we are now in a position to offer investors access to our investment expertise in the form of ETFs.”

The Julius Baer Smart Equity ETF range is available to retail and institutional clients in Germany, the UK, Austria, Liechtenstein and Luxembourg. Other countries are planned to follow, subject to approval by the respective supervisory authority.

Fund data

Trading planned to start on XETRA: 29 June 2012

SICAV Julius Baer Special Funds

Domicili: Luxembourg

Legal structure: SICAV under Luxembourg law / UCITS IV

Investment manager : Swiss & Global Asset Management Ltd.

Market maker : Flow Traders B.V.