Slow and steady can win the race, as Aesop’s famous fable showed. The same can be said of equity investing. Experience tells us investors can secure superior returns over the long term by allocating capital to listed companies that have stable profitability, healthy balance sheets and trade at attractive valuations. Strangely, this is at odds with conventional wisdom.
Most investors tend to believe that gaining greater rewards requires taking on more risk. That's why they are often drawn to companies that promise rapid – and perhaps unsustainable – growth.The flipside to this behavioural bias that investors tend to underestimate the potential returns of stable, conservatively-run businesses.
Instead, we believe that investors can achieve superior returns by investing in a diversified portfolio of disciplined, conservatively-run companies bought at the right price.
Preserving capital during a market sell-off has a positive influence on long-term returns.
These businesses demonstrate an ability to generate attractive shareholder returns without taking undue risks. In our view, they are likely to be more resilient to changes in the business cycle and better prepared to face economic downturns.
Unearthing these companies demands comprehensive analysis. Our approach is to take a 360-degree view. We look at a number of business characteristics that combine to lend an equity investment a genuinely defensive profile. It's an approach that is different from many defensive equity strategies, which tend to focus on just one factor, such as stock volatility.
We also recognise, however, that there are times when certain types of defensive stocks trade at an excessive premium. This is why we constantly monitor and assess the valuation of individual defensive attributes and shift our investments accordingly. It's an approach that can deliver over the long run.
While defensive stocks tend to lag in the early stage of a market rally, they typically fall less, sometimes far less, than mainstream equity investments during a decline. Preserving capital during a market sell-off has a positive influence on long-term returns. Because of the compounding effect, the defensive stocks we invest in should outperform the MSCI World Index over the course of a market cycle, both in absolute terms and when adjusted for volatility. What is more, these stocks are more attractive than typical low-volatility stocks as they tend to fall less during a downturn and rise more in up markets.
Important legal information
The Pre-Contractual Templates (PCT) when applicable, the Key Information Document (KID), as well as the Prospectus must be read before any decision to invest. The Prospectus (in English and in French), the PCT when applicable, the KID (in French and in Dutch), as well as the latest annual and semi-annual reports (in English and French) are available free of charge at our financial Belgian agent CACEIS Belgium S.A., 86C /b320, Avenue du Port, 1000 Bruxelles or at the management company, Pictet Asset Management (Europe) SA, 6B, rue du Fort Niedergruenewald, L-2226 Luxembourg, as well as in digital format at www.assetmanagement.pictet.
The summary of investors rights is available here and in French and in Dutch at www.assetmanagement.pictet under the heading "Resources", at the bottom of the page.
The list of countries where the fund is registered can be obtained at all times from Pictet Asset Management (Europe) S.A., which may decide to terminate the arrangements made for the marketing of the fund or compartments of the fund in any given country.
The NAV are available at www.beama.be.
Claims and Mediation Service: For any claim you can contact Pictet Asset Management (Europe) S.A., Compliance Department, 6B, rue du Fort Niedergruenewald, L-2226 Luxembourg or the Consumer Mediation Service (Service de Médiation pour le Consommateur), North Gate II, Boulevard du Roi Albert II 8 in 1000 Bruxelles or at www.mediationconsommateur.be. The Mediation Service may suggest solutions for the settlement of the dispute. In the absence of agreement on the proposed solutions, each party may bring proceedings before the competent courts.
This marketing material is issued by Pictet Asset Management (Europe) S.A.. It is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of, or domiciled or located in, any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. Pictet Asset Management (Europe) S.A. has not taken any steps to ensure that the securities referred to in this document are suitable for any particular investor and this document is not to be relied upon in substitution for the exercise of independent judgment. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future.
Before making any investment decision, investors are recommended to ascertain if this investment is suitable for them in light of their financial knowledge and experience, investment goals and financial situation, or to obtain specific advice from an industry professional.
The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested.
This marketing material is not intended to be a substitute for the fund’s full documentation or any information which investors should obtain from their financial intermediaries acting in relation to their investment in the fund or funds mentioned in this document.
The investment guidelines are internal guidelines which are subject to change at any time and without any notice within the limits of the fund's prospectus.
The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice. Reference to a specific security is not a recommendation to buy or sell that security. Effective allocations are subject to change and may have changed since the date of the marketing material.
Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on assetmanagement.pictet in the “Resources” section of the footer.
This document is a marketing communication issued by Pictet Asset Management and is not in scope for any MiFID II/MiFIR requirements specifically related to investment research. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any products or services offered or distributed by Pictet Asset Management.
Pictet AM has not acquired any rights or license to reproduce the trademarks, logos or images set out in this document except that it holds the rights to use any entity of the Pictet group trademarks. For illustrative purposes only.