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    risks.

    The following risks may be materially relevant but may not always be adequately captured by the summary risk indicator and may cause additional loss: Counterparty risk, Risks linked to the use of derivatives and financial techniques and Model risk.

    glossary.

    All Roads Strategies

    Engineering smooth investment journeys

     

    All Roads is our flagship, multi-asset franchise that seeks to deliver smooth investment journeys: robust, stable returns and the management of downside risks throughout all market environments. Flexibility is at the heart of All Roads and its risk-based approach can be adapted to suit various risk appetites. 

    Cash +3%

    net return from flagship balanced
    strategy since inception

    10 + years

    the strategy was launched in 2012

    5%

    annualised volatility from flagship
    balanced strategy since inception1

    purpose-built investment vehicle
    purpose-built investment vehicle·robust engine, responsive controls·clean braking, soft suspension·fuelling the drive·responsive steering for all-weather control·research-driven innovation·one vehicle, many destinations·investment team ·performance and data·insights

    purpose-built investment vehicle.

    For us, diversification means investing across different risk exposures. 

    In practice, this involves analysing, understanding and investing in a variety of risk premia to meet defined risk targets while remaining focused on capital preservation. This may not always deliver the best portfolio for a given environment but instead focuses on smoothing the investment journey over the long term, and throughout different market and economic cycles.

    To achieve this outcome, we have designed a purpose-built investment vehicle with key qualities:

    • An endurance engine that is also capable of sharp acceleration
    • Responsive steering for all-weather control
    • Dependable braking to avoid hazards
    • Shock-absorbing suspension to compensate for unforeseen obstacles

    robust engine, responsive controls.

    Our portfolio engine is our strategic asset allocation (SAA) and dynamic overlays. 

    The SAA is designed to perform in the three macroeconomic regimes that have been dominant throughout history – expanding growth, declining growth and inflationary shocks – by ensuring consistent, fully liquid exposure to assets suited to these scenarios. This broad toolkit of assets includes developed- and emerging-market equities and sovereign fixed income, inflation-linked bonds, credit and commodities.

    Our tactical overlays aim to provide the acceleration needed to respond to short-term shifts in the landscape. Trend-following and carry strategies, based on changes in price indicators, and a Macro Risk Premia (MRP) overlay, which draws on data for growth, inflation and monetary-policy surprises, enable rapid portfolio responses. Based on different market and macro signals respectively, they offer further diversification.

    clean braking, soft suspension.

    To go the distance, managing risk is essential. Winning is mainly about not losing. Avoiding or minimising exposure to market drawdowns not only improves risk-adjusted returns and can also be more important than picking winners in the long run. 

    Our dynamic drawdown management (DDM) methodology is core to our way of risk-based investing. It aims to minimise the impact of market drawdowns while remaining as diversified as possible, meaning we actively manage the total exposure of the portfolio and may, at times, allocate meaningfully to the only certain safe haven: cash. 

    By dynamically sizing a portfolio in this way, we aim to preserve capital, stay true to the prescribed risk target, maintain diversification and reduce volatility.

    Reliable braking: adaptive risk allocation in All Roads multi-asset strategies2

    fuelling the drive.

    Investment environments are often unpredictable. With change being the only certainty, we don’t forecast the direction of markets or the performance of any asset class but instead prepare for any eventuality through diverse portfolio inputs.

    No single asset class consistently drives our returns. Some years, duration leads. In others, equities and alternative risk premia do. Sometimes it is commodities. Of course, performance drivers shift within much shorter timeframes, too. We see this as proof of genuine diversification: if a portfolio consistently has diversified sources of return as an output, this means that its inputs – the risk-premia exposures – were diversified to begin with.

    By focusing on risk premia, we believe investors can identify and gain exposure to the next diversifier – whatever it might be – as it comes to the fore. This helps to achieve a smoother return profile during periods of volatility.

    The diverse return drivers of All Roads multi-asset strategies3

    responsive steering for all-weather control.

    To maintain our SAA, deploy tactical strategies and implement DDM, we believe it is best to invest as rationally as possible. By removing emotion in bullish markets, bearish episodes and everything in between, we expel behavioural biases that can distract us from our objectives, such as:

    • Loss aversion. The pain of past underperformance can lead to underinvestment or early exits from positions
    • Overconfidence. People often perceive their abilities to being artificially strong, which leads to rash or poorly informed decisions
    • Anchoring. Too much stock is placed in certain information, causing reluctance to exit underperforming positions when there are better alternatives

    For this reason, the strategies driving All Roads are totally systematic, tested and – importantly – fully transparent. All of our thinking, and the disciplined implementation processes, are there for investors to see, always. We say what we do. We do as we say. 

    research-driven innovation.

    A scientific approach is critical to the design and implementation of our risk models, active strategies and other portfolio features, therefore we run a continuous research programme dedicated to risk-based investing. 

    We aim for the outputs to have real-world applications: our commodities exposure and Macro Risk Premia (MRP) overlay are two examples of how our research and development has directly benefited All Roads.

    Our team includes PhDs and Chartered Financial Analysts, and we apply our engineering backgrounds, financial expertise and investment experience on projects that can produce direct portfolio outcomes and prioritise those likely to have the most material effect on risk-adjusted performance.

    Timeline: research-driven innovations for All Roads4
     

    one vehicle, many destinations.

    In a world characterised by unanticipated change, we believe the systematic, risk-based approach driving All Roads provides multiple benefits to a range of investors. 

    All Roads is an adaptable, high-performance vehicle. It can suit conservative, balanced, growth and riskier appetites – and its liquidity and strength in diversification lend it to multiple uses in broader portfolios. For example, as a:

    • Total-return, liquid-alternative solution for allocations including fund-of-hedge-fund portfolios
    • Satellite strategy for a core 60/40 or diversified growth portfolio. As such, it can be a complementary, liquid-growth exposure, or a source of risk-based diversification 
    • By picking the appropriate profile, liquid low or high volatility diversifier within broad investment portfolios
    • Portfolio construction style diversifier alongside more traditional, discretionary approaches


    For many of us at Lombard Odier, All Roads serves a different purpose: as the core strategy for the Group’s pension plan, its performance directly influences our financial futures. We are committed for the long haul.

    Day in, day out, the All Roads franchise applies an evidence-based, disciplined and dynamic approach to investing in diverse risk premia to navigate uncharted territory – for us, this is the essence of risk-based investing.
     

    investment team5.

    LOcom_AuthorsAM-Storno.png

    Aurèle Storno, CFA
    CIO Multi-Asset
    Lead Portfolio Manager
    LOcom-AuthorsAM-Forclaz.png
    Alain Forclaz, PhD
    Deputy CIO Multi-Asset
    Portfolio Manager

    LOcom-AuthorsAM-Wong-2.png

    Sui Kai Wong
    Senior Portfolio Manager

    Find out more about our All Roads fund, including share classes.

    more information


    sources.

    1 LOIM. Past performance is not a guarantee of future results. Capital protection is a portfolio construction goal and cannot be guaranteed. Performance/data (as applicable) of LO Funds –All Roads Class EUR NA, net of all fees and expenses. Cash index: €STR. Capital protection/Capital preservation represents a portfolio construction goal and cannot be guaranteed. Target performance/risk represents a portfolio construction goal. It does not represent past performance/risk and may not be representative of actual future performance/risk. Strategy inception: 24 January 2012.
    2 Source : LOIM as at February 2023, for Illustrative purpose only. Allocations may change. Capital protection/Capital preservation represents a portfolio construction goal and cannot be guaranteed.
    3 LOIM as at February 2023.Past performance is not guarantee of future results, Holdings and/or allocations are subject to change. Performance attribution in EUR net of fees but excluding other unexplained factors, which include amongst other, FX effects, intraday and trading profit and loss.
    4 LOIM, Bloomberg as of February 2023. Past performance is not a guarantee of future results. For illustrative purposes only.
    5 Source: LOIM. Data as at 12.06.2023. Teams are subject to change

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    important information.

    This document is a Corporate Communication and is intended for Professional Investors only. This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice. This document is issued by Lombard Odier Asset Management (Europe) Limited (hereinafter the “Company”).

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