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abrdn launches Australian GRM strategy

By Yasmine Masi21 October 2021

abrdn has announced its Global Risk Mitigation (GRM) Strategy is now available to Australian professional and advised investors.

Since its inception in 2019, the strategy has aimed to help investors mitigate equity risk, reduce portfolio volatility and deliver stronger long-term compounded returns as they plan for their financial future.

This is achieved by actively managing 30 systematic hedging strategies united within one solution. The defensive strategy targets a strong negative correlation to equities and a beta to the MSCI World Index of -0.6 or lower.

It is also designed to offer investors more protection as the equity market drawdown increases, allowing stronger potential returns the greater the market falls. This comes after the strategy returned +34.62% when the MSCI World Index fell 13.23% in March 2020.

“Returns have been plentiful over the past decade as policymakers have kept interest rates low while at the same time injecting liquidity into financial markets,” said Stephen Coltman, Lead Portfolio Manager of abrdn’s GRM strategy.

“But economic and geopolitical uncertainties, low bond yields and variable cross-correlations among traditional assets – particularly in distressed markets – are now clouding the outlook. That leaves investors with a tricky dilemma: how to meet return objectives without excessively increasing risk?

Coltman said abrdn’s strategy solves this problem investors are facing by combining systematic implementation and execution with active oversight to provide an efficient and cost-effective protective strategy.

“GRM brings together a variety of hedging strategies into one managed solution that allows clients to maintain or increase allocations to higher expected return investments while still managing their overall drawdown risk.”

Brett Jollie, Managing Director at abrdn Ausralia, said the GRM strategy is just one of the solutions on offer that can help investors reach their goals and help financial planners add value to their investment proposition.

“Financial planners benefit from having strategies available to them that can help manage downside volatility,” he said.

“GRM is designed to protect an investor’s portfolio throughout their career and into retirement, working to safeguard their financial future and smoothing the investment journey. It should be regarded as an adviser’s financial planning investment partner, ensuring the foundational strength of their investment strategy.”

The GRM strategy is managed by abrdn’s global alternative investment strategies team of 50, which has over 20 years of experience managing outcome-oriented alternative investment portfolios.

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