Investment concept and
investment approach

In the first step, we determine your personal investor profile. This is primarily determined by your investment objectives and your risk tolerance. Furthermore, your financial framework conditions as well as your previously acquired securities knowledge are included in the individual investor profile.

Your investor profile forms the basis for determining your strategic asset allocation. In this process, we allocate information on your investment objectives as well as your risk attitude and risk tolerance to a risk class. In addition, we exclude individual asset classes for the portfolio structure - if desired. Using a recognized scientific method, we then determine a strategic asset structure that is optimal for you from a risk/return perspective.

In accordance with the strategic asset structure and the portfolio allocation based on it, we determine a concrete investment proposal for you. This is based on our current investment universe.

Within the framework of tactical asset allocation, asset management may deviate by up to +-30% from the strategic quotas for equities and gold within defined bandwidths. The starting point for this is the permanent analysis of the global financial markets. Based on a quantitative model, the tactical asset allocation is reviewed at least once a month and adjusted if necessary. The extent of the deviation depends on our qualitative assessment of the markets.

Within the asset classes, it is our aim as an active and fundamentally oriented asset manager to achieve added value for you. Therefore, we only select stocks that have gone through our research process and are attractively valued on a fundamental basis. Our buy-side analysts work out the favored stocks from the various sectors after the universe has already been pre-filtered in a quantitative screening. Proprietary valuation models are used for this purpose. The portfolio managers responsible for the equity module compile the portfolio from these stocks. On the fixed income side, we focus on credit analysis and global portfolio structure. ETFs are used selectively in the equity and bond areas in order to be able to adjust the tactical asset allocation promptly without having to change the optimal portfolio structure within the asset classes.

For unit-linked asset management, we mainly rely on ETFs, which are characterized by broad diversification, low costs and high liquidity. When selecting products, our focus is on tracking error and replication method in addition to low cost. Our portfolio implementation team is responsible for the ongoing performance and risk measurement of the sample and customer portfolios and ensures that the restrictions and investment guidelines are adhered to.

Expected return p. a.

The return measures the total return on capital employed (current income and capital appreciation). For our optimization, we use the average returns of the asset classes in the period under review and weight them by the portfolio shares.

Volatility p. a.

The fluctuations of historical time series are described by the so-called standard deviation. It describes the range within which the return will move with a probability of around 68 %. The greater the standard deviation, the greater the fluctuation range of the return. Example: return 5%, standard deviation 6% - the return will range between -1% and +11% with a 68% probability. For our optimization, we use the fluctuation range of the portfolio on an annual basis in the period under consideration.

Value at Risk (95%)

Value at Risk is a ratio that describes the loss that will not be exceeded within a certain holding period with an assumed probability. For example, a value at risk (95) of 6.6% on an annual basis means that if a loss occurs in the next 12 months, there is a 95% probability that it will not be greater than 6.6% of the investment amount.

Methods:

• Diversification of asset classes
• Diversification within asset classes
• Avoidance of "cluster risks" (high risk concentrations), e.g. in relation to countries, currencies or individual issuers/companies

Asymmetric risk profiles:

• Loss limitation takes precedence over profit maximization
• Managing asset classes at the overall portfolio level by using an allocation model that generates asymmetric returns and therefore cuts losses

Models:

• Statistical models
• Quantitative models of risk analysis
• Structured, qualitative review of quantitative models

Methods:

• Definition of "thresholds" for specific risks
• Analysis of risk structure and their interaction
• Definition and measurement of forward-looking risk indicators ("stress indicator")
• Performance comparison with benchmarks
• Analysis of scenarios ("stress tests")

Models:

• Defined investment criteria and limits (ongoing monitoring)
• Statistical models
• Structured, qualitative review of quantitative models

The investment concept is based on your individual investment preferences. The investment concept is implemented in accordance with the specifications we have collected for you. It is subject to regular monitoring and, if necessary, adjustments by us using proven statistical models as well as a structured, qualitative review of the quantitative models. The portfolio composition is based on the current market assessment of our team of experts as well as a selective choice of portfolio securities and (shares, bonds, risk-adjusted investments, ETFs and funds) to achieve an optimal risk/return structure.

Within the framework of professional wealth management, we are very interested in achieving your desired financial goals in highly complex and confusing markets. All without you having to worry about managing your investments. Therefore, the HAL investment team takes over the investment decision-making. There is no active intervention by you as a client - beyond the choice of investment strategy.

ETFs are exchange-traded investment funds. They are also called index funds, because they usually try to replicate a specific index like the Dax 1:1. The investor thus buys virtually the entire index in a mutual fund. Since ETFs only replicate an index, the fund manager only has to replicate the composition of the index. For this reason, ETFs are also referred to as passive investments. In actively managed funds, on the other hand, the fund manager tries to actively allocate the fund's assets in order to outperform its benchmark, which is usually also an index or a basket of indices. In this way, the fund manager is trying to beat the market through active management, rather than tracking it like an ETF.

Of the four underlying asset classes - i.e. the main asset classes equities and bonds and gold, plus risk-adjusted investments as an admixture for return/risk diversification - equities have the highest volatility over the long term. The portfolios determined for the individual risk classes in our strategic asset allocation therefore show an increase in the neutral/strategic equity ratio for higher risk classes.

The investment universe depends on the product features you select. In the case of unit-linked asset management, we invest your capital in ETFs and actively managed funds. For further diversification, gold and risk-adjusted investments are also used, provided you have not deselected these as part of the individual configuration of your investment proposal.

In the case of classic individual securities asset management, instead of investing in funds, we invest your assets as far as possible in individual securities (equities and bonds) that have been fundamentally evaluated by our investment team as part of our in-house research process and are considered attractive.

As part of our ethical single stock asset management, we invest globally in bonds and equities of large and mid-capitalized companies and issuers that demonstrate a high-profile sense of responsibility towards the environment and society. In addition, the securities are screened according to the strict principles of an independent ethics committee. In order to ensure transparent implementation of the ethical criteria, this strategy focuses on individual stocks.

In single stock asset management, the portfolio is basically actively managed, i.e. depending on the market situation, equities, regions and currencies are overweighted or underweighted within the ranges that suit you. In order to be able to ensure sufficient diversification in the case of small equity quotas, an internal fund solution can be used for this proportion. Derivatives are not used.