The Dreyfus Corporation, a BNY Mellon company, has launched the Dreyfus TOBAM Emerging Markets Fund, an actively-managed emerging markets equity mutual fund.
TOBAM’s patented investment process, which aims to provide an optimal diversification of risk contribution, is designed to enhance an investor’s risk/return profile versus traditional capitalization-weighted strategies.
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Curtis Arledge, CEO of BNY Mellon Investment Management, said: "Investors who are indexing the core of their portfolio have significant unmanaged risk. We believe a strategy that actively manages risk, by optimally diversifying risk contribution, is a more intelligent way to build core exposure for client portfolios. By using an optimal diversification approach, TOBAM seeks to avoid benchmark biases and neutrally allocate risks, in order to produce a portfolio with less risk and greater return potential over time.
"Dreyfus TOBAM Emerging Markets Fund is the first of what is soon to be a suite of innovative offerings that provide investors with different options to traditional beta investing."
Yves Choueifaty, president and CIO of TOBAM, said: "Diversification is a powerful tool which combines a set of non-fully correlated assets, seeking results in a portfolio whose risk is lower than the weighted average of the single assets’ risks. Unlike benchmarks, TOBAM’s unique Diversification Ratio aims to eliminate bias toward high or low volatility stocks. It is long only, with no leverage, and is fully invested. We believe that TOBAM provides the ‘Most Diversified Portfolio’ via full diversification and neutral risk allocation."
Globally recognized for its innovative investment approach, Paris-based TOBAM, the fund’s subadviser, seeks to maximize the fund’s portfolio diversification in terms of various risk metrics by applying a systematic investment approach. The process tries to identify securities that have the lowest possible correlation to each other for inclusion in the fund’s portfolio.
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By GlobalDataThe TOBAM patented Anti-Benchmark Maximum Diversification model attempts to construct a portfolio of securities that TOBAM believes offers the most diversification potential and avoids the concentration risk that exists in traditional market capitalization-weighted indices. The fund’s portfolio managers focus on stock selection as opposed to making proactive decisions as to country, industry or sector exposure.
Asset allocation and diversification cannot ensure a profit or protect against loss of principal.
Main Risks:
Equity funds are subject generally to market, market sector, market liquidity, issuer, and investment style risks, among other factors, to varying degrees.
Investing internationally involves special risks, including changes in currency exchange rates, political, economic and social instability, a lack of comprehensive company information, differing auditing and legal standards and less market liquidity. These risks are generally greater with emerging market countries than with more economically and politically established foreign countries.
The use of derivative instruments, such as options, futures and options on futures, forward contracts, swaps, options on swaps, and other credit derivatives, involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. A small investment in derivatives could have a potentially large impact on the fund’s performance.
