Investment process

Quality and principles

Erste Asset Management currently manages assets worth EUR 61.43bn, out of which EUR 38.65bn for institutional investors (as of 31 August 2019). We offer our institutional clients an investment process that is based on the four pillars: "team approach", "flexibility", "consistency", and "traceability".

In order to be able to invest our clients’ money in an optimal fashion, our fund managers cooperate closely with our in-house Research Department. Our experts invest in accordance with clearly defined processes that are based on te following quality-assuring principles:
 

Team approach

Flexibility

Consistency

Traceability

Intensive and permanent exchange between fund managers and analysts.
 

Flat hierarchies between team leaders and Head of Investment Department facilitate quick reaction to changing markets.

The investment approaches are clearly defined, and we stick to them with a great sense of discipline while continuously developing them.

The decisions of our fund managers are transparent and traceable at all times. This is the only way to comprehensively assess and improve processes.

The right strategy for every asset class

Whether equities, bonds, or alternative investments – every asset class requires tailormade methods and models in order to successfully seize opportunities and avoid risks.

The most important approaches of Erste Asset Management:
 

Investment process Description Example
Bottom Up – qualitativ
  • Focus: individual securities
  • The asset selection affects the portfolio composition
  • East European equities
    Top Down
  • Focus: economic research
  • The research influences the portfolio composition at country and sector level.
  • Mixed funds
    Fundamental – quantitativ
  • Focus: key ratios of asset classes
  • The analysis of the asset classes on the basis of fundamental key ratios by historical comparison affects the portfolio composition
  • Global equity funds where the focus is on country or sector weightings
    Technische Modelle
  • Focus: models determining short-, medium- and long-term trend phases
  • The output of these models translates into buy or sell signals
  •  

    Follow this link for the list of countries in which the target funds bought for umbrella funds may be domiciled:

    Best execution for best quality

    Erste Asset Management follows the EU Directive on markets in financial instruments (MiFID) with regard to best execution practices. Our goal in doing so is to achieve the optimum result for our clients when executing their orders. Best execution is an integral part of our quality standards.

    Three quality standards of Erste Asset Management:

    1. In-house trading desk in the Investment Department
    2. Erste Asset Management fund managers directly execute transactions
    3. Only selected, licensed traders are authorised to execute transactions

    Erste Group Bank AG, Am Belvedere 1, A-1100 Vienna, Austria, is the custodian bank for the investment funds managed by Erste Asset Management GmbH. The custodian bank employs sub-custodians. For a list of these sub-custodians, please follow this link:

    NO conflict of interest

    Erste Asset Management GmbH and its Austrian subsidiaries (each individual one of them an Austrian investment company with licence to manage investment funds in accordance with the Austrian Investment Fund Act; jointly referred to as “Erste AM”) are obliged to act in the best interest of their clients (share certificate holders). The issue of conflict of interest is of high importance to Erste AM.

    Risikomanagement

    Important asset in the daily business

    To Erste Asset Management, successful risk management is an important asset and a core competence, as it also crucially affects our daily business. In it, we focus on financial risk but also take into account operating and legal risks.

    1. Financial risk: our focus is on the precise management of risks on the capital market. Among them are market risks such as volatility as well as credit and liquidity risks.
    2. Operating risk: the operating risk can be influenced by internal factors such as employees, structures, processes, and systems as well as by external ones.
    3. Legal risk: changes in the regulatory framework and legal requirement set the scope of action for asset managers.

    The process – this is how risk management works

    In order to take effective measures against risks, you have to identify them first. We create a risk profile for every single fund and check every security in the fund for risks on a daily basis. To this end, we apply state-of-the-art software. Our risk management team then checks and evaluates the results and takes further steps, if necessary. If the risk exceeds defined boundaries, the experts will immediately inform both Management and the affected departments. This way, we can take measures to contain possible negative consequences within a turnaround time of 24 hours.

    Process overview:

    • Risk identification
    • Risk assessment
    • Risk management
    • Risk controlling
    • Communication (reporting)

    Everything under control – safety first

    In order to ensure the high quality of risk management we have our system tested regularly, both internally and externally. Internal auditing is handled by our Auditing Department, while Ernst & Young are our external auditors.

    Thus, our comprehensive risk management fullfils strict standards: daily risk assessments, an extensive reporting system, and internal as well as external auditing of our risk management ensure the safety of the capital entrusted to us.

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    Disclaimer

    This document is an advertisement. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

    The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH, pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

    The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the key investor document/KID can be viewed in their latest versions at the  web site www.erste-am.com or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com.

    This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision.

    Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of fund shares to American citizens. Misprints and errors excepted.