BNY Mellon ARX’s strategies
· Hedge Fund strategy – MACRO
The funds that make up the MACRO hedge fund family feature the same management process, but bear different risk level and liquidity. Management is based on a solid analysis of macroeconomic fundamentals, as well as on many variables in the local and international economies, focusing on opportunities in interest rate, foreign exchange, stock and international markets, seizing alpha in deals that have positive asymmetry, including the positions’ hedges.
The senior managers jointly develop the strategies and positions of the funds, backed by the Macroeconomic and the Equity Research Team. This team is also supported by information from all fund managers within the BNY Mellon group across the world, by means of constant conference calls.
The strategy seeks absolute returns that are not directly linked to any market, maintaining its freedom in allocating the funds’ assets. Naturally, each fund’s return target varies in accordance with its respective risk level and liquidity criteria, which can indicate the execution of certain operations.
Given BNY Mellon ARX’s constant concern with preserving investors’ capital, we always seek cheap hedges for the portfolios. The allocation strategies include directional, arbitrage and volatility positions.
· Long & Short Strategy
The Long & Short strategy seeks absolute returns uncorrelated with market indexes by means of exposure to specific risk factors, combining long and short stock positions.
The portfolio is composed of a long stock portfolio
versus a portfolio that shorts stocks,.in addition to the sale of index futures beyond the pair trades strategy (stock class, capital structure, and risk arbitrage). Assets may be picked both due to distortions that we believe may settle in the long term and to events that may speed up such convergence.
· Long-Only Diversified Strategy
This strategy’s investment philosophy is based on capital preservation and income generation by investing in companies that present a high dividend (present or future) to price ratio and solid valuations.
The fund’s portfolio must be built and underpinned by thorough analyses of companies, considering the factors below:
- Track Record: recent dividend distribution, debt structure and growth
- Qualitative Analysis: liquidity, sector analysis and corporate governance
- Future Quantitative Analysis: projections for future earnings, projections for dividend yield and growth
These analyses are directly associated with liquidity and diversification criteria.
The fund has a 10%-per-stock and 30%-per-sector threshold when setting up positions and it is not tracked for error in regards to stock indexes or any other gauge.
· Long-Only Concentrated Strategy
This strategy aims to invest in local market stocks that are solidly grounded and have perspectives for higher returns in the long term.
The strategy does not have a pre-defined return target
, given that it aims to beat all market indexes in the long term. The Ibovespa is used as a benchmark, but the management strategy does not limit itself due to the index. We acquire the best available assets, regardless of its presence and weight in the Ibovespa index, but we do so cautiously over its liquidity. This strategy generates, in the short term, a distance between its performance compared with the Ibovespa and, in the long term, tends to generate higher returns as a result of better asset selection.
· Hedge Fund Strategy – EQUITY HEDGE
This strategy aims to beat the CDI rate in the long term using an active management in asset allocation without taking credit risk, and seeking to seize the best investment opportunities available in the market. Due to a greater focus on the long term and a holding period, there is greater tolerance in maintaining certain operations. There is no concern regarding volatility in the short term.
This strategy seeks gains from long-term positions set up gradually after an analysis of the macroeconomic variables and the fundamentals of the selected companies.
The strategy may use derivatives, not limited to the stockholders’ equity, for hedging, arbitrage, as well as for directional bets in order to boost results. The strategy may have a significant chunk of its stockholders’ equity in the stock markets, potentially utilizing their respective derivatives, but without linking it to any pre-determined performance indicator.