Natixis Investment Managers Solutions Investment Committee Overview

  • June 11, 2020
The Natixis Investment Managers Solutions Investment Committee was established in 2015 to provide asset allocation guidance for Natixis Portfolio Clarity® clients. The Committee also develops capital market views and allocation recommendations for the firm’s tactical model portfolios, and uses its assumptions to manage the proprietary Clarity Partners Global Moderate Portfolio.

The ten members of the Investment Committee have wide-ranging experience in multi-asset allocation. Members hold a variety of financial credentials including CFA®, CAIA, CIPM and FRM®. Many are Natixis Portfolio Clarity® consultants and analysts whose opinions may reflect insights gained from their interactions with financial advisors. Others bring institutional, high net worth, and portfolio management expertise. The Committee is chaired by the Natixis Advisors Senior Portfolio Strategist.

Investment Committee members hold credentials including CFA®, CAIA, CIPM and FRM®.

The Committee’s diversity of backgrounds assures lively and well-informed discussions related to the economic, market and corporate environment. Members review data from multiple angles, gleaning various insights and regularly challenging consensus views. Equity and Fixed Income sub-committees meet weekly, evaluating macro, fundamental and valuation data to establish their recommended allocations. The full Committee meets weekly and votes monthly, with the highest conviction views submitted to the model portfolio management teams.

Active Allocation Recommendations
The Investment Committee’s objective is to produce stronger risk-adjusted returns than the average professionally managed moderate risk profile portfolio, over both strategic and tactical time horizons. Strategic assumptions cover a 12-18 month horizon and form the foundation of models such as the Tactical Core portfolios. Shorter-term tactical recommendations use a three- to six-month outlook reflected in the portfolios’ tactical tilts.

Themes and Examples: Tactical Tilt
In model portfolios with a tactical tilt component, Investment Committee views are generally implemented using ETFs. This example from late February 2020 focuses on actions taken as the markets began to react to the growing coronavirus pandemic.

Macro Backdrop
  • Acceleration in coronavirus cases outside of China is forcing market participants to reassess the impact on the global economy.
  • The ability of the virus to easily spread, with “hot spots” forming throughout the world, could damage global growth into the third quarter.
  • We remain skeptical of the magnitude and effectiveness of fiscal and monetary responses from developed world countries.
Investment Implications
  • Risk assets are repricing the possibility of global contagion, with increasing uncertainty possible as hot spots spread.
  • International developed equity and equities in emerging markets, the source of the virus, are already facing economic headwinds, making them especially vulnerable.
  • Overweight or even weight equity positions are particularly susceptible to a protracted selloff as the virus spreads and growth slows.
Risks to This View
  • Hot spots are contained before broad contagion; trend economic growth resumes.
  • Fiscal and monetary stimulus globally provides sufficient support over the coming quarters and market downside is limited.
Action
  • Reduce emerging market and international developed equity exposure in favor of high quality fixed income.
Outcome
  • Virus continued to spread and equities quickly fell into a bear market.
  • Subsequent investment committee actions de-risked the portfolio further, preserving capital.
From a portfolio construction context, the investment committee’s tactical asset class views complement the suite of Natixis active managers. The portfolio management team prefers high conviction active managers with strong fundamental investment processes. Tactical portfolio views are expressed through the use of ETFs, while strategic views are expressed through active managers. This combination provides Natixis model portfolios with the opportunity to outperform over both short and long time horizons through tactical positioning and fundamental security selection.

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Natixis Portfolio Clarity®

Analysis and insight for better portfolio construction – Natixis Portfolio Clarity® is the portfolio consulting service of Natixis Investment Managers.

This information is provided for informational purposes only and should not be construed as investment advice.

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed-income and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

Indexes are not investments, do not incur fees and expenses and are not professionally managed. It is not possible to invest directly in an index.

Unlike passive investments, there are no indexes that an active investment attempts to track or replicate. Thus, the ability of an active investment to achieve its objectives will depend on the effectiveness of the investment manager.

Asset allocation models are intended for informational purposes only and should not be construed as a recommendation or investment advice, as the allocations provided do not take into account the investment objectives, risk tolerance, restrictions, liquidity needs or other characteristics of any one particular investor.

Natixis Advisors, L.P. provides discretionary advisory services through its divisions Active Index Advisors®, Managed Portfolio Advisors® and Natixis Investment Managers Solutions-US. Discretionary advisory services are generally provided with the assistance of model portfolio providers, some of which are affiliates of Natixis Investment Managers. Natixis Advisors, L.P. provides non-discretionary advisory services through its Natixis Portfolio Clarity® team.

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