Allocation - this is how we compose our strategy funds

By our allocation process we seek to maximise the potential return on our strategy funds with due regard to the risk profile. For that purpose we have developed our own model which is a signal tool for quantitative screening of asset classes. The model, which evaluates equities in relation to developed-market bonds, has been set up with:

• fundamentals which are for instance macroeconomic indicators that signal the state of national economies;
• valuation which rests on dynamic valuation across asset classes. Valuation is dynamic, because it is based on three-year past performance and therefore changes over time;
• sentiment (investor behaviour) in the financial markets. Sentiment is only included in the evaluation when the fundamentals and the valuation both give sell signals. If we find that sentiment among investors is more bearish than justified, sentiment gives a buy signal.

Then follows a qualitative analysis when the portfolio managers combine the results they have gleaned from the quantitative analysis with their evaluation of developments in the financial markets.

Investment limits