Diversification acts as a stabilizing force in the face of market uncertainties, especially in a volatile macroeconomic environment. In this context, adopting a multi-asset strategy plays a crucial role in spreading investments across non-correlated assets, thereby reducing risk.

The Asset team identified this trend while analyzing structured investment solutions that have recently distinguished themselves in the market, a focus that will be highlighted in The Asset Triple A Private Capital Awards 2024.

BNP Paribas Wealth Management, which manufactures structured products using a multi-asset strategy in a principal-protected format, offers investment solutions that are tailored to align with the dynamics of the current market environment marked by high interest rates and inflation.

The wealth manager’s Best of Profiles Note solution offers three distinct asset allocation profiles, each configured with varying weights across equity, rates and commodities exposure. This approach enables investors to access multiple asset classes through systematic strategies, maximizing the potential for profit by leveraging the best-performing allocations among the three profiles.

For equities, the strategy offers long exposure to global equity markets, effectively capitalizing on growth opportunities worldwide. In the realm of rates, a trend-following, long-short strategy is employed to monetize fluctuations in short-term interest rates, adeptly navigating market movements.

Regarding commodities, the strategy also uses a trend-following long-short approach, encompassing a diverse universe of 11 commodities, allowing investors to capitalize on the persistent trends in commodity prices.

The beauty of incorporating long-short quantitative strategies lies in their potential to benefit from both bullish and bearish market conditions. Notably, trend-following strategies aim to identify and profit from the direction and strength of market trends using technical analysis tools, such as moving averages, trendlines and price momentum indicators.

By taking long positions in assets gaining traction and short positions in those losing momentum once a trend is established, investors can effectively ride market momentum. These strategies are particularly effective and tend to yield profitable results when markets exhibit clear and sustained upward or downward movements. This comprehensive framework is designed to optimize returns while managing risk across various market dynamics, ensuring a resilient investment approach. 

In a climate of uncertainty, investment solutions that prioritize diversification and principal protection provide a strategic way to navigate market volatility, enabling investors to pursue their financial goals with greater confidence.

The Best of Profiles Note offering won the Best Structured Investment and Financing Solution in Equity at The Asset Triple A Private Capital Awards 2024.

This article is the latest addition to The Asset’s Nuts & Bolts series that looks into the nitty-gritty of some of the sophisticated investment products and capital market deals in Asia. For the previous article in this series, please click here.