Ethna-AKTIV: Flexibility as a guiding principle


Senior Portfolio manager Ethna Aktiv fund e cofounder Ethenea


Flexibility and active management have characterised the Ethna-AKTIV since its launch in 2002, and today – more than 20 years later – the fund remains popular among investors for its balanced risk profile and flexible multi-asset approach.

Looking back, the fund has once again proved its strength in the complex macroeconomic environment of the past two years. Thanks to a successful balancing act between capital preservation capitalising on opportunities that arose, the fund price was able to climb to a new all-time high relatively quickly. The Ethna-AKTIV thus remains a solid basic investment that proves its strength even in turbulent times.

2022 and 2023: Challenging years

The years 2022 and 2023 were characterised by a high level of uncertainty from both an economic and geopolitical perspective. Two wars, inflation at levels not seen since the 1970s and the constant evocation of a global recession made investment decisions a challenge. While fears of inflation led to numerous central bank interventions and a drastic cycle of interest rate hikes, massive fiscal packages counteracted the expected weak growth. All of this led to high volatility on the capital markets, which was reflected in short but strong trends in both directions – for both interest rates and share prices. Against this backdrop, active asset allocation and adequate risk management were essential. The focussed and flexible approach of the Ethna-AKTIV, ETHENEA’s flagship product, addresses precisely this issue and thus continuously creates added value for its investors.

With a performance for 2023 of 7.44%, the multi-asset fund is close to its all-time high. Ethna AKTIV is one of the few funds in its peer group to have managed to generate a positive return in 2022 and 2023. Not to mention static investment concepts such as the classic 60/40 portfolio, which quickly reach their limits in such a challenging capital market environment. Despite the high volatility of equities and the lack of diversification power of bonds, the Ethna-AKTIV was able to demonstrate sustained relative strength thanks to its flexible approach, defying the adversities and participating appropriately in the opportunities during this phase.

How did we achieve this?

The reasons for this success lie in the investment philosophy of the actively managed multi-asset fund, which operates independently of benchmarks and is also committed to protecting investor capital.

Active management means that we dynamically adjust the allocation strategically and tactically to changing conditions by managing liquid instruments from the areas of bonds, equities, commodities, cash and currencies on a daily basis. Taking into account the relative attractiveness of the asset classes to each other, the fund ensures an attractive risk/return ratio for its investors. To illustrate this, the entire range of possible equity allocations has been utilised in the past two years. While 2022 was characterised by a ratio close to zero, especially after the outbreak of war, in 2023 it was possible to participate in the boom of the leading US index with a ratio of 49%, which was close to the maximum in some cases.

Flexibility is another guiding principle of our actions: the Ethna-AKTIV is not orientated towards any benchmark in its positioning. The decisive factor is the risk/return ratio. This flexibility enables the management team to utilise opportunities and also to take and endure unconventional positions. Keyword unconventional: the management of the portfolio’s interest rate sensitivity is a good example of this. Narrow bandwidths around a predefined level are customary in the market. The Ethna-AKTIV management team, on the other hand, translates its conviction regarding the expected interest rate movement into sustainable positions. In 2022, the year of the worst bond crash in decades, the bond portfolio even contributed a small plus to the fund’s performance thanks to a skilful duration overlay.

The overall philosophy is rounded off by the credo of capital preservation. Even if the focus is on capital growth, it is worth avoiding disproportionate setbacks in the long term. On the one hand, this protects the investor from unfavourable selling decisions, and on the other hand, fewer losses need to be recovered. Investors should become more aware of this again, especially after the experiences of recent years. The sum of the diversification and quota management measures helped the Ethna-AKTIV to limit losses in 2022 to a single-digit percentage. Firstly, this saved the investor a lot of headaches in 2022 and secondly, the risk budget saved in this way could be profitably invested in the subsequent bull market.
The underlying philosophy and the process based on it are intended to ensure that such results can be repeated. In order to achieve an attractive risk-adjusted return over the entire cycle, it is extremely important not only to reduce losses but also to ensure that you can participate appropriately in the next bull market. This requires not only the will, but also the ability, i.e. the corresponding risk budget.

Ethna-AKTIV: Off to a good start in the new year

Looking ahead, we consider the opportunity set for multi-asset funds in general and for the Ethna-AKTIV in particular to be above average. There is once again a return to be earned on the bond market, equities are not overvalued across the board and the macroeconomic environment offers not only challenges but also very interesting opportunities.

The Ethna-AKTIV is therefore once again a suitable basic investment for both existing and potential investors, who do not lose sight of the goal of continuous capital growth even in stormy times.