Natixis Global Asset Management (NGAM) has launched an international hedged equity fund from Gateway Investment Advisers, LLC (Gateway).
Managed by a leader in hedged equity strategies, the new fund is designed to play a conservative, risk-managed role in a portfolio allocation to international equity. As an industry-leading provider of asset allocation and risk management solutions, NGAM is focused on providing products designed to help today’s investors construct more durable portfolios.
The Gateway International Fund has the potential to deliver long-term results similar to the majority of the returns associated with the international developed equity market (MSCI EAFE Index) at a reduced level of risk. Co-portfolio managers on the Gateway International Fund are Michael T Buckius and Kenneth H Toft of Gateway. Buckius also co-manages the firm’s flagship fund, Gateway Fund (GATEX).
“With continued volatility creating uncertainty and more investors looking abroad for growth, the time is right for a risk-managed approach to the international developed equity market,” says J Patrick Rogers, president and CEO of Gateway Investment Advisers. “We believe our fund is the first to use index option contracts to hedge risk in this market, an approach we have used successfully for over 30 years in the US market with the Gateway Fund.”
The Gateway International Fund invests in a broadly diversified portfolio of 200-400 international stocks that seeks to track the performance of the MSCI EAFE Index. Based on market capitalisation, the fund’s portfolio combines representative equity holdings from six indexes: Australia’s ASX/S&P 200, Europe’s Euro Stoxx 50, Hong Kong’s Hang Seng, Japan’s Nikkei 225, Switzerland’s SMI, and the United Kingdom’s FTSE 100. As a hedge, the fund actively sells index call options and buys index put options on the same six indexes. The blended portfolio represents over 90 percent of the equity exposure of the MSCI EAFE Index. Certain countries are excluded due to small index representation and/or undeveloped index option markets. Periodic rebalancing is conducted to approximate MSCI EAFE Index country weights.
“Sustained market volatility has caused investors to focus more attention on investment risk,” says David Giunta (pictured), president and CEO, Natixis Global Asset Management – US Distribution. “A low volatility approach to international equity, such as Gateway’s, can be a building block in a durable portfolio designed to help minimise the risks inherent in changing markets and meet return objectives over time.”