Dynamic Total Return

This strategy is offered by Newton Investment Management Ltd (‘NIM’). This strategy may be managed by an affiliate of NIM and may apply a research process that differs from that applied by NIM.

Strategy overview

The strategy seeks to strike an attractive balance between portfolio risk and return over the long-term, targeting equity-like returns at a lower level of volatility over a full market cycle. Dynamic Total Return allocates across liquid global asset classes using a disciplined, systematic investment process based on bottom-up, fundamental valuations and top-down macroeconomic insights. The portfolio positions may be directional (embedding an underlying market beta) or diversifying market-neutral exposures.

Dynamic Total Return can serve a number of roles in a portfolio. With advanced de-risking methods designed to mitigate downside risk, it is suitable for those seeking to earn equity-like returns while reducing overall equity beta and mitigating extreme market drawdowns. Dynamic Total Return can also function as a core multi-asset exposure that seeks higher risk-adjusted total returns (i.e. Sharpe Ratio) than an all-equity strategy.

Strategy profile

Strategy inception: 1 May 2006

Investment team

: Our investment team of research analysts and portfolio managers work together across regions and sectors, helping to ensure that our investment process is highly flexible.

A team of 17 investment professionals

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Dimitri Curtil

Global head of multi-asset solutions

Keith Lee

Portfolio manager, Asset Allocation Portfolio Management team

James H Stavena

Head of portfolio management, Multi-Asset Solutions

Torrey K Zaches

Portfolio manager, multi-asset solutions

Elaine Zhong

Portfolio manager, Asset Allocation Portfolio Management team

Past performance is not a guide to future performance. Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

Key investment risks

: Objective/performance risk: There is no guarantee that the strategy will achieve its objectives.

Currency risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.

Derivatives risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the strategy can lose significantly more than the amount has invested in derivatives.

Changes in interest rates & inflation risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may affect the value of the strategy.

Credit ratings and unrated securities risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the strategy.

Credit risk: The issuer of a security held by the strategy may not pay income or repay capital to the strategy when due.

Emerging markets risk: Emerging markets have additional risks due to less developed market practices.

Counterparty risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.

Leverage risk (derivatives): The use of leverage, such as engaging in reverse repurchase agreements, lending portfolio securities, entering into futures contracts or forward currency contracts, investing in inverse floaters, entering into short sales, the use of portfolio leverage or margin and engaging in forward commitment transactions, may magnify the strategy’s gains or losses. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment.

Short sale risk (derivatives): The strategy may make short sales, which involve selling a derivative instrument it does not own in anticipation that the security’s price will decline. Short sales expose the strategy to the risk that it will be required to buy the derivative sold short (also known as “covering” the short position) at a time when the derivative appreciated in value, thus resulting in a loss to the strategy. Short positions in derivatives involve more risk than long positions because the maximum sustainable loss on a derivative purchased is limited to the amount paid for the derivative plus the transaction costs, whereas there is no maximum attainable price on the shorted derivative. In theory, derivatives sold short have unlimited risk. The strategy may not always be able to close out a short position at a particular time or at an acceptable price. The strategy may not always be able to borrow a derivative the strategy seeks to sell short at a particular time or at an acceptable price. Thus, there is a risk that the strategy may be unable to fully implement its investment strategy due to a lack of available derivative or for some other reason. It is possible that the market value of the derivatives the strategy holds in long positions will decline at the same time that the market value of the derivatives the strategy has sold short increases, thereby increasing the strategy’s potential volatility.