From the three maxims of our investment philosophy, "Avoid mistakes", "Evolution instead of revolution" and "Manage risks", we derive corresponding trading maxims.
AVOID MISTAKES
Long-term success does not come from landing as many hits as possible, but from avoiding as many mistakes as possible. "Black boxes" (investments that we don't understand), "market timing" (trying to find the best time to buy and sell securities) and "cyclical behavior" (falling into euphoria or panic when there are strong market movements or following fashion trends) are among the biggest mistakes made by an investment manager.
EVOLUTION INSTEAD OF REVOLUTION
The capital market is one big puzzle that is constantly changing. Companies are also subject to constant pressure to evolve. That is why we use an analytical approach on the way to the right asset allocation and the selection of our individual investments. To do this, we work with various probability scenarios and, reasonably, also evaluate third-party analyses. The continuous further development (and not the reinvention) of this process is in the foreground.
MANAGE RISKS
In order to generate returns, you have to take risks. We have no influence on returns, but we can manage risks. In a nutshell: We pay attention to sufficient diversification, sensible liquidity management and discipline when building the portfolio.
„It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change" Charles Robert Darwin, 1809-1882
The BlackPoint Evolution Fund pursues a wealth management investment approach and is modeled on the balanced family wealth management strategy that the fund has been implementing since October 2021.
The basis is an equity portfolio that combines established and dynamic elite companies - the "DARWIN Portfolio". While the established ones are already generating strong cash earnings predictably, the potential for higher growth in the dynamic ones lies in disruptive new business models. This robust combination unites resilience and the adaptability of these companies - characteristics that are decisive for successfully surviving different market phases.
THE PREMISES OF OUR STRATEGY
DIVERSIFICATION
„Don't put all your eggs in one basket.“ H. Markowitz
ATTRACTIVENESS
„It is far better to buy a wonderful company at a fair price than to get a fair company at a wonderful price.“ W. Buffett
RESILIENCE
Resilience and adaptability, characteristics that justify “Darwinism”, are crucial for a company to successfully survive times of crisis.
WELL BUILT GROWTH
We invest in companies that generate consistently high cash flow return on investment in order to generate and increase value.
INTERACTION
We react flexibly and undogmatically to different conditions, but always rational and fact-based.
NOTHING BUT SUSTAINABILITY
We regard sustainability aspects as a risk factor and therefore integrate them into our investment process with the help of specialized companies.
ASSET ALLOCATION
The asset allocation is divided into a strategic part, with the most constant possible maintenance of the risk / return profile target, and a tactical part, with consideration of short-term developments.
STOCK / BOND SELECTION
The stock / bond selection is based on the “DARWIN portfolio” or the bond core / satellite strategy and uses quantitative and fundamental company analysis, which also takes sustainability criteria into account.
RISK MANAGEMENT
Risk management assesses the potential for possible undesirable developments. This is done through the robust and guideline-checked portfolio construction, the monitoring of all positions and the ongoing evaluation of current developments.
PRE-SELECTION IN THE INVESTMENT UNIVERSE
Within an investment universe of over 40,000 companies, we quantitatively evaluate shares of companies worldwide, initially using a few preset selection criteria such as minimum market capitalization, risk profile, regions and sustainability parameters.
BALANCE SHEET ANALYSIS AND DETAILED QUANTITATIVE SELECTION
After the preselection, the investment universe condenses to around 1,500 companies. Another proprietary quantitative evaluation with scoring is now carried out on the basis of the five factors profitability, stability, growth, sustainability and market valuation.
Each factor is supplemented by sub-factors. For example, sub-factors such as gross income, operating profitability, equity and total capital as well as cash flow are taken into account for the profitability analysis. Sub-factors such as operating income, profit and assets are also relevant for the assessment of company growth.
With our analysis and the resulting data aggregation as well as the percentile placements, we basically want to get three questions answered: How good (profitability, stability, growth), how sustainable and how expensive is a company?
INVESTMENT UNIVERSE FROM ELITE COMPANIES
The detailed quantitative selection creates an investment universe of around 200 companies worldwide, from which the final selection of the individual companies for our equity portfolio is fed. Here, topics such as the future viability of a business model, growth dynamics, management quality and key financial figures come to the fore. But also disruptive business models receive special attention in this step.
DARWIN PORTFOLIO
A broadly diversified equity portfolio is created from the previous steps, which combines around 40 established and dynamic elite companies - the "DARWIN Portfolio".
While the established ones are already generating strong, predictable cash returns, the potential for higher growth among the dynamic ones lies in disruptive new business models. This robust combination brings together the resilience and adaptability of these companies. Properties that are decisive in order to successfully survive different market phases.
The management of sectors and regions as well as the ongoing review and adjustment of all portfolio positions ensure that our equity portfolio continues to develop over time.
For our bond portfolio strategy, the controlled interaction with our equity portfolio is particularly important to us in order to create a balanced overall portfolio. We expect this, taking sustainability criteria into account, an appropriate return contribution to the overall portfolio, without currency risks.
The portfolio construction begins with the creation of a macro-economic base scenario and the calculation of the current relative attractiveness of stocks compared to bonds and bonds compared to cash. Specific country risks are also taken into account from the start. So we decide, from top to bottom, so to speak, and according to a “core / satellite approach”, in which bond types, sectors and ratings we want to invest in principle.
The “core” portion of the bond portfolio, which makes up around two thirds, consists primarily of government and covered bonds as well as investment grade corporate bonds from the USA and Europe. In addition, we invest in high-yield corporate bonds from the USA and Europe in the “satellite” segment, and occasionally also in hybrid (convertible or subordinated bonds) and emerging market bonds, exclusively in so-called hard currencies. The implementation takes place predominantly via individual issues; a slight addition of ETFs at times would be possible.
We use research systems and data platforms from specialized companies to analyze the relative attractiveness and the issuer. We mainly invest in liquid areas (larger issues) and in EUR-listed or currency-hedged bonds with BB to AAA credit ratings.
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Important Information
You can invest in the BlackPoint Evolution Fund directly and securely online and always keep an eye on your investment thanks to daily transparency. This works with just a few clicks via BlackPoint digital, a service offered by FINTEXLAB, a brand of WMD Capital GmbH (HRB 226421 Commercial Register Munich), in cooperation with BlackPoint Asset Management GmbH.