A multi-asset strategy with
three defence belts

A broad diversification is not enough to reduce volatility and risk in a successful multi-asset strategy. Allianz Global Investors adds two extra defence belts.

Belt One: Diversification

For Allianz Global Investors the composition of a diversified investment portfolio is only the first of three defence belts for its multi-asset funds. "A diversified investment portfolio provides a more stable return. Nevertheless, a diversification with more than 200 shares and bonds is not sufficient to limit the risks as much as possible. If all asset classes fall sharply during a crisis, the losses can also run high in a diversified investment portfolio," says Marcus Bayer, Product Specialist Multi Asset at Allianz Global Investors.

Belt Two: Active risk management

That is why the unique investment process behind the multi-asset strategy of Allianz Global Investors is itself a defence belt. After all, fundamental analysis is combined with a systematic model that identifies trends for different asset classes and indicates exaggerations in the market. The statistical analysis can determine the direction, duration and intensity of the trend. "A fund manager can only invest in assets for which the trend is positive. A reversion indicator also shows reversals of the trends, which gives the fund manager the opportunity to anticipate and to reduce the position for that asset class again.

Belt Three: Market risk identification

"A broad diversification and trend analysis still offers too little buffer at times when all asset classes fall sharply, such as in 2008 and 2011. At those moments there is still a need for active risk management," says Bayer. When the financial markets go through a crisis, the multi-asset strategy of Allianz Global Investors aims to limit the loss to a maximum of half the loss of the broad market. This is done with active risk management. Bayer: "The fund manager is obliged to reduce positions as soon as the losses exceed a certain threshold. That threshold is not static but is constantly evolving."

Active risk management comes with a price. "It's an insurance. And just like all other insurance contracts, you pay an insurance premium," says Bayer. In exceptional circumstances, active risk management can limit the losses. But when markets recover quickly, there is a risk that the fund manager will eliminate positions that recover the next day. Bayer: "That's the price you pay for maximum defence." So far, the risk management system has only been activated twice within the multi-asset funds of Allianz Global Investors. The last time dates from February 2016.

This is a marketing communication. Please refer to the prospectuses of the Funds and to the Key Information Documents. Documents before making any final investment decisions. For fund distributors and professional investors only. For Investors in France: Investors should note that, relative to the expectations of the Autorité des Marchés Financiers, these funds present disproportionate communication on the consideration of non-financial criteria in its investment policy.

Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors might not get back the full amount invested. Investing in fixed income instruments may expose investors to various risks, including but not limited to creditworthiness, interest rate, liquidity and restricted flexibility risks. Changes to the economic environment and market conditions may affect these risks, resulting in an adverse effect to the value of the investment. During periods of rising nominal interest rates, the values of fixed income instruments (including positions with respect to short-term fixed income instruments) are generally expected to decline. Conversely, during periods of declining interest rates, the values of these instruments are generally expected to rise. Liquidity risk may possibly delay or prevent account withdrawals or redemptions. The volatility of fund unit/share prices may be increased or even strongly increased. Past performance does not predict future returns. If the currency in which the past performance is displayed differs from the currency of the country in which the investor resides, then the investor should be aware that due to the exchange rate fluctuations the performance shown may be higher or lower if converted into the investor’s local currency. This is for information only and not to be construed as a solicitation or an invitation to make an offer, to conclude a contract, or to buy or sell any securities. The products or securities described herein may not be available for sale in all jurisdictions or to certain categories of investors. This is for distribution only as permitted by applicable law and in particular not available to residents and/or nationals of the USA. The investment opportunities described herein do not take into account the specific investment objectives, financial situation, knowledge, experience or specific needs of any particular person and are not guaranteed. The Management Company may decide to terminate the arrangements made for the marketing of its collective investment undertakings in accordance with applicable de-notification regulation. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable at the time of publication. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail. The duplication, publication, or transmission of the contents, irrespective of the form, is not permitted; except for the case of explicit permission by Allianz Global Investors GmbH.

For investors in Europe (excluding Switzerland & the United Kingdom)
For a free copy of the sales prospectus, incorporation documents, daily fund prices, Key Information Document, latest annual and semi-annual financial reports, contact the issuer at the address indicated below or www.allianzgi-regulatory.eu. Austrian investors may also contact the Austrian information agent Erste Bank der österreichischen Sparkassen AG, Am Belvedere 1, AT-1100 Vienna. Please read these documents, which are solely binding, carefully before investing. This is a marketing communication issued by Allianz Global Investors GmbH, www.allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). Allianz Global Investors GmbH has established branches in France, Italy, Spain, Luxembourg, Sweden, Belgium and the Netherlands. Contact details and information on the local regulation are available here (www.allianzgi.com/Info). The Summary of Investor Rights is available in English, French, German, Italian and Spanish at https://regulatory.allianzgi.com/en/investors-rights

For investors in Switzerland
For a free copy of the sales prospectus, incorporation documents, daily fund prices, key investor information, latest annual and semi-annual financial reports, contact [the Swiss funds’ representative and paying agent BNP Paribas Securities Services, Paris, Zurich branch, Selnaustrasse 16, CH-8002 Zürich - for Swiss retail investors only] or the issuer either electronically or by mail at the given address. Please read these documents, which are solely binding, carefully before investing. This is a marketing communication issued by Allianz Global Investors (Schweiz) AG, a 100% subsidiary of Allianz Global Investors GmbH. The Summary of Investor Rights is available in English, French, German, Italian and Spanish at https://regulatory.allianzgi.com/en/investors-rights

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