Our Low Tracking Error Equity Strategies

Many investors do not want to deviate too much from the index. The returns on global, capital-weighted indices have largely proven them right in recent years. Nevertheless, a purely passive approach falls short: it neither takes sustainability criteria into account nor does it address concentration risks or targeted risk optimization. This is exactly where our index optimized products come in.

Why we don't just invest in the capital-weighted index

The total weighting of the seven largest stocks in the MSCI World Index accounts for around a quarter of the entire index. In addition, these stocks are predominantly from the IT sector and related industries i.e. highly cyclical sectors. In turbulent market phases, they are therefore often among the biggest losers.

If you want to invest in line with the index, you should do it right with well-thought-out optimization rather than purely passive replication.

Our solution: OLZ Global Equities ex CH Index Optimized

OLZ Index Optimized is an optimized and cost-efficient equity strategy that aims to keep deviation from the index as low as possible, with a tracking error of around 2%. We focus on efficient optimization, which enables index-tracking with around 200 stocks instead of more than 1000. This approach is supplemented by a risk optimization component, which is, however, significantly less pronounced than in our classic risk optimized funds. The low tracking error strategy also meets strict sustainability criteria – both through exclusion criteria and specific constraints in the optimization process.

Conceptual representation of our optimization: Proportionate reduction of index deviations and MinVar optimization

Added value of our index optimized equity solutions

Lower concentration risks

Concentration risks in the index are significantly reduced due to the high weighting of the largest stocks.

Attractive risk-return characteristics

Since losses are slightly reduced and the strategy keeps pace with the index in positive markets, risk adjusted outperformance can be expected in the long term.

Significantly improved sustainability profile

Significant reduction in CO2 intensity and higher overall sustainability score

We are happy to advise you and answer your questions.

Investment solutions for assets over CHF 500,000. 
We will call you when it suits you best.

Or contact us directly:
+41 31 326 80 00
info@olz.ch

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