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Liquid Alternative Investments

What are Liquid Alternative Investments?​

Liquid alternative investments are mutual funds or exchange-traded funds (ETFs) that aim to generate a total or absolute return.

Alternatives provide investors with diversification and downside protection through exposure to alternative investment strategies. They offer greater transparency and require lower minimum investment levels than traditional alternative investments while showing improved liquidity. They follow strategies which are usually less constrained than traditional investments and use additional tools like leverage, shorts and derivatives.

A wide range of types of alternatives and ways to combine them with traditional portfolios​

Why add Liquid Alternative Investments to your portfolio?​

Enhance Diversification​

Historical correlations between liquid alternatives and the main traditional markets are low, and even negative for certain styles of alternatives. Within alternatives, the various investment styles also bring a breadth of diversification, with most correlations below 40%.

The alternative universe also provides investment propositions with various levels of risk diversification, as represented by the historical ratio of volatility to the equity volatility.

Enhance Risk-Adjusted Profile​

The risk-return profile of alternatives tends to be asymmetric: the strategies can behave differently depending on an up and down market environment. While this is more pronounced in certain types of strategies than others, the addition of a balanced portfolio of alternatives usually brings additional returns without increasing drawdown risks by the same amplitude.

Unique Investments​

The portfolio of Funds offered by THEAM Quant presents clients investments they would not find on their own. It provides them with a unique opportunity to take advantage of non-traditional systematic strategies.

Our Solutions

Fixed Income Diversifier​

THEAM Quant – Fixed Income Diversifier gives access to different sources of returns in the interest rates curve with risk control mechanisms, in a fully systematic fashion. The objective of the fund is to increase the value of its assets over the medium term, by being exposed to a global dynamic long/short portfolio of short-term money market rates and long-term government bonds. The portfolio is built using a systematic selection of diversified sources of return in the interest rates markets while aiming at (i) keeping the objective of keeping the Sub-fund annual volatility at a target level of 4.5% and (ii) reaching market neutrality of the government bonds exposure.

The fund leverages on the most recent research on factor investing in fixed-income.

Equity World DEFI Market Neutral​

For the more directional, risk-averse profiles who seek stable returns in various market conditions, we created the DEFI Market Neutral.

The objective of the fund is to increase the value of its assets over the medium term by being exposed to a leveraged long/short dynamic basket of equities and futures listed on worldwide markets or operating on these markets, the components of which, are chosen using a systematic selection-method, based on a fundamental analysis of companies.

It takes a long exposure to the four core equity factors, as well as short positions in regional market indices (S&P 500, EURO STOXX 50 and Nikkei 225). The weights of each exposure are adjusted in order to neutralise the aggregate beta versus the MSCI World Index.

Dispersion US

The Dispersion US fund provides the potential of diversification for an equity portfolio during material market drawdowns while offering a potential neutral carry cost over the medium term during rising markets. The Fund strategy is Implemented systematically via a basket of individual stock volatility swaps and an index volatility swap. 

Multi Asset Diversified

The Multi Asset Diversified fund aims to increase the value of its assets over the medium term, by being exposed to a diversified long/short basket, the components of which are chosen using a systematic selection method based on different asset classes (equities, fixed income, commodities and real estate). The exposure to the dynamic basket will however be adapted in order to keep the fund annual volatility at a target level of 10%.

It has a systematic approach based on two investment principles: trend following and risk diversification.

This strategy is also available in Defensive.

Equity US Premium Income

The US Premium Income fund seeks provide income and capital growth by implementing a systematic option strategy on a selection of US equities which aims at generating income in bullish and moderately bearish markets. The fund targets an income of 3% per year above USD short term interest rate, the achievement of this target is not guaranteed.

LFIS Selection

The LFIS Selection fund aims to increase the value of its assets over the medium term, through the use of quantitative investment strategies across different asset classes. The Sub-fund is taking into account recommendations from an Investment Adviser, with the objective to identify sources of return coming from market opportunities or inefficiencies and combine them within a balanced portfolio.

Alpha Commodity

The Alpha Commodity fund objective is to generate absolute performance thanks to a synthetic exposure to a portfolio of quantitative strategies. In conclusion, the Fund aims at benefiting from key Commodity market’s specificities.

Key points

  1. Access, on a pure-Alpha basis, to similar Commodity Alpha sources as the ones used by our flagship in-house commodity strategy, BNP Paribas® Oscillator Commodity strategy (live since October 2007). Additional source of Alpha: backwardation.
  2. Non directional, market-neutral portfolio of non directional, market-neutral underlying quantitative strategies. As a result, the contributors are broadly uncorrelated with each other in order to benefit from diversification.
  3. A dynamic and risk-balanced allocation as well.
  4. At last, the funds aims at delivering a level of volatility ranging from 3% to 6%.

Raw Materials Income

The Raw Materials Income fund aims to generate a sustained income over the medium term.

Key points

  1. Access to the Commodity Curve Alpha source that was implemented in our flagship in-house commodity strategy, BNP Paribas® Oscillator Commodity strategy (live since October 2007).
  2. Commodity Curve Alpha: created through an optimal investment on the forward curve using the S&P GSCI® Dynamic Roll mono-indices.
  3. Diversified allocation among 9 Commodities within an ex-agriculture and livestock broad commodity universe.

For more details, please check the product page which is accessible through the table at the bottom of this page.

      Investments in the aforementioned strategies are subject to market fluctuation and risks inherent in investing in securities. The value of investments and the revenue they generate can increase or decrease and it is possible that investors will not recover their initial investment. Source: BNP Paribas Asset Management Holding, registered with the Paris Registry of Commerce and Companies under number 682 001 904 as a Limited Company with share capital of 23 041 936 euros. Registered office: 1 Boulevard Haussmann, 75009 Paris. Postal address: TSA 47000/75318 PARIS CEDEX 09