The Lynx Active Balanced Program

The investment strategy

The Lynx Active Balanced Program is actively managed and allocates across and within equity indices, fixed income and a diversified commodity index. These asset classes have historically performed well in different market environments and exhibited low correlation among them, making them suitable as building blocks of a long-term portfolio. The overarching investment principle is to allocate risk rather than a predetermined level capital to different asset classes. By balancing the risk, the strategy seeks to minimize the negative impact on performance of market downturns that may result from for example economic recessions or inflationary environments. The strategy has an expected long-term average volatility target of 10 per cent (annualized). The risk target used to be 8 per cent up until July 2023 but has been adjusted to better reflect a global 60% equity and 40% bond portfolio. However, the short-term risk level is actively managed through the automated systematic techniques embedded in the investment process. Depending on the strategy’s risk appetite, the total portfolio risk may vary; if the strategy´s proprietary developed models forecast low or negative returns for several or all asset classes, the total risk level will be set lower than the long-term average. If market volatility increases, the position exposures will decrease to maintain the desired risk level. The minimum exposure to each asset class may be as low as 0 per cent although the strategy will generally have some level of investment in most asset classes and financial instruments. The exposure to equities is not expected to exceed 100%. Indicatively, the strategic portfolio targets a risk-balanced allocation of 60% equities, 30% fixed income and 10% commodities. Based on perceived market opportunities the tactical portfolio may deviate substantially from these levels. Exposure is achieved through derivatives.