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Case Study: Embark Horizon Funds

Discover how Embark and Columbia Threadneedle successfully use Insight, our ESG Stochastic Asset Model, to provide strategic asset allocations, ensuring strong performance across five risk-profiled multi-asset funds. And see why Insight can ensure asset allocations remain highly efficient and deliver a maximum expected return.

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Key objective

Embark operates five risk-profiled multi-asset funds known as the Horizon Fund Range. With three levels of risk management, these funds have a unique investment process. Input from EValue, Columbia Threadneedle and Embark Investment Services has led to strong performance since the funds' launch in 2014.

The funds aim to achieve a positive investment return for a targeted level of risk by investing in a mixture of asset classes. And to ensure this, it's key to review and change the weightings between these classes in a measured way.

Let's take a look at how Insight works with Columbia Threadneedle and Embark to ensure strong performance for these funds.

Our solution

Discover how you can apply to your business.

We use our ESG Stochastic Asset Model, Insight, to produce thousands of potential plausible future market scenarios, starting with today's market conditions. Using these scenarios, we can create forecasts for a  combination of different asset classes, and you can construct asset allocations and portfolios with optimised risk-reward characteristics.

 

This approach to asset allocation is successful for several reasons:

  • There's a consistent definition of risk, which isn't driven by recent short-term market volatility. Instead, it looks forward to the volatility of the outcomes over the likely term of an investment.
  • Work has gone into understanding the durational risk of bonds. Because of the risk-reducing properties of bonds, lower risk investors can achieve their chosen risk profile with portfolios containing a higher exposure to assets with higher risk-reward characteristics. This offers them the potential benefit of higher returns while accurately targeting their assessed risk profiles.
  • Insight is a multi-asset, multi-market, multi-currency global economic model. And its comprehensiveness and consistency provide the framework and discipline for assessing the relative value of different asset classes.
  • Our thorough, systematic approach ensures that investment decisions don't get caught by any single ideas – regardless of how interesting. Instead, they systematically consider the full range of potential outcomes. Without this, decisions risk getting overlooked during periods of market volatility, that will influence investment market returns.

THE RESULTS

Strong Performance

Since 2014

  2014 2015 2016 2017 2018 2019 2020 FE Crown Rating Fee (OCF)
Fund I 1 2 2 3 1 1 1 ***** 0.84%
Fund II 1 1 2 2 1 1 1 ***** 0.82%
Fund III 1 1 2 2 2 1 2 ***** 0.81%
Fund IV 1 1 1 1 3 1 3 ***** 0.81%
Fund V 1 1 1 1 3 1 2 ***** 0.82%

 

Year end Quartile Ranking

Source: FE FundInfo, as of July 2020. OCF calculated 1st May 2020.

Contact us now to learn more about how our range of services can benefit your business.

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