Protected Equities Strategy

Protected Equities Strategy for DC

Revolutionising the UK Defined Contribution Market with the Protected Equities Strategy

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Benefit from the equity market with protection

The Berenberg Protected Equities Strategy invests in equities and utilises options to reduce downside risks while generating attractive returns over the long-term.

The strategy is available to a wide range of investors including pensions funds, family offices and insurance companies. The strategy can also be suitable for investors looking to manage their solvency capital ratios under Solvency II.

What are the benefits for investors?

Increased predictability from equity investments
Ability to maintain higher and longer-term equity exposure
Highly customised solutions available

Properties of the Berenberg Protected Equities Strategy

Systematic, transparent, and liquid approach
Low transaction costs
Incorporates climate change and ESG
Flexible protection levels
Regions: Global, Regional

Protection levels

The Berenberg Protected Equities Strategy offers levels of protection tailored to investor requirements. An illustration of three possible applications of protection are shown below.

High protection

Targets:
Limitation of the annual drawdown to approx. 10 % p.a., maintain volatility below 10 % p.a., potential equity market participation of approx. 3 % per month

Compared to equities, the strategy is intended to have lower risk and the potential to generate higher returns than global bonds.

Moderate protection

Targets:
Limitation of the annual drawdown to 15 % p.a., volatility of approx. 10 % p.a.

Compared to equities, the strategy is intended to have lower risk and the potential to generate higher returns than mixed funds

Tail risks hedging

Targets:
Limitation of the annual drawdown to approx. 20 % p.a., volatility of approx. 10-15 % p.a., over 90 % participation in positive stock market returns

Compared to equities, the strategy is intended to be lower risk and offer higher returns than equities over the long term through entire market cycles.

What can you expect from the strategy in varying market periods?

Rising equity markets

In rising markets, a positive performance can be expected. The steadier the positive market development, the higher the participation rate.

Flat equity markets

The expected performance should be similar to that of equities. In this scenario, the net effect of the options is expected to be small.

Falling equity markets

The expected performance should exceed that of equities. The extent of risk reduction depends on the hedging level chosen. In general, the larger and faster the losses on the equity markets, the better the performance compared to equities.

Berenberg Protected Equities Strategy at a glance

Higher predictability of returns compared to unprotected equities
Participation in the upside potential of the equity market
Equity selection focused on climate change and ESG

Berenberg Protected Equities Strategy

Opportunities	Risks
The strategy of equities combined with options enables participation in the upside potential of selected equity markets.	The prices of the assets are subject to daily fluctuations and may also decrease.
The strategy has a focus on providing downside protection in falling markets.	The performance depends on the general development of the capital market.
Solvency II investors can benefit from the reduction in capital requirements.	The targeted reduction in solvency capital ratio requirements cannot be guaranteed.
The investor benefits from attractive risk-adjusted returns	The reduction of the equity risk is partly financed by the purchase of call options. In strongly rising stock markets, the performance participation of the strategy may be limited.
The strategy can be customised to meet the individual needs of investors