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Risk-based asset allocation

Handling variable market risks with dynamic asset allocation

The risk budget takes into account an investor’s viable fluctuation range and maximum loss limit. It determines how much an investor can invest in risky assets (eg equities). Since market risks are subject to high volatility, the risk budget for static asset allocation is massively over or undershot at times - depending on the phases. Dynamic management of asset allocation leads to fewer deviations of effective portfolio risks from the defined risk budget.

In turbulent market phases, the portfolio risk is curbed by reducing the equity component. In a quieter market environment, however, more risks can be taken and the equity ratio increased accordingly.

OLZ Dynamic – risk-based management of asset allocation

The concept is based on scientifically sound risk indicators which measure the state of the current market constellation. This current measurement is compared with similar historical risk constellations in order to derive an optimal adjustment  of asset allocation.

Our risk management takes place within individual asset classes as well as in the overall portfolio.

  • Within the asset classes, the risk is significantly reduced compared to the market index thanks to optimised composition of individual securities («OLZ minimum risk») and portfolio efficiency is increased.
  • In terms of the overall portfolio, deviation of the portfolio risk from the risk budget is reduced through market-driven asset allocation adjustments. This allows the individual risk budget of an investor to be exploited more efficiently and in a more targeted manner.

Focusing on multi-level risk management allows the investor to hold a larger equity stake compared to static implementation and thereby to benefit, in the long term, from higher return expectation.

How can I invest with OLZ?

We offer customised mixed mandates tailored to your individual investment strategy and your investment regulations with dynamic bandwidth management.

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