20 MAR, 2023
By Constanza Ramos
Diego Franzin, Co-Founder and Head of Portfolio Strategies Plenisfer Investments SGR.
Plenisfer Investments SGR S.p.A. is an investment boutique dedicated to benchmark-free total return funds built through an active multi-strategy and multi-asset approach aimed at achieving clear and measurable objectives. Plenisfer, which is headquartered in Milan and has offices in London and Dublin, launched May 4, 2020, to manage its first fund in which Generali Group has invested €1 billion.
The company was established in May 2019 at the initiative of four founding partners who have been working together for more than 20 years, Giordano Lombardo (CEO and Co-CIO), Mauro Ratto (CO-CIO) Robert Richardson (COO), and Diego Franzin (Head of Portfolio Strategies), with whom we spoke about this project that is generating so much interest in the industry.
Plenisfer was born out of a dream shared with 3 co-founders after more than 30 years in asset management, 20 of them spent together: to propose a different SGR that would try to overcome the fences of hyperspecialization in the industry to offer an innovative investment proposition, able to bring together the different visions of specialists in this world, integrating macro and micro visions, with a purpose: no longer to make hyperspecialized funds that optimize small market segments, but to try to work for return and risk objectives, with an active approach free from the constraints imposed by benchmark and traditional asset allocation.
For 30 years, markets, net of crises such as those of 2000 or 2008, were positive overall, supported by an uninterrupted decline in inflation and interest rates. It was an environment in which all asset classes behaved in a decorrelation and predictable way, so all it took was a well-balanced portfolio to achieve positive performance.
We started Plenisfer with the belief that a favorable environment, characterized by easy market trends, was coming to an end and therefore a new and different approach to management was needed. The year 2022 confirmed the thesis behind Plenisfer’s birth: inflation and rates began to rise, and expansionary monetary policies came to an end. This unprecedented scenario generated repercussions on all asset classes that moved, for the first time, in the same direction, i.e., losing. And after a very difficult 2022, 2023 also proves to be a complex year for markets: to navigate them, we think a different approach to management is needed than the one taken over the past 30 years.
We believe that in order to navigate unseen markets, today you have to go back to the roots of the trade, that is, to active management freed from allocation choices imposed by benchmarks. In this way, a wide range of globally diversified opportunities, including unconventional ones, can be included in portfolios. Our idea of active management, however, goes further: we think one should no longer allocate by asset class, but by selecting the individual ingredients that are deemed functional in achieving a certain level of return and risk.
In short, today the ability to select individual opportunities is crucial, but it is not enough: it is crucial to look at the entire capital structure to understand, for example, whether the greatest potential lies in the equity, credit, or, for example, commodities fronts related to the trends the company might be riding.
We gather around the same table senior professionals from different specializations who analyze together, each with his or her expertise, each investment idea. Thus we break down silos between specializations and realize the potential of a boutique according to a model that is difficult to replicate in larger organizations where each specialist looks at his or her “silo.”
With a 360-degree perspective on each investment idea, the Investment Committee then makes collaborative decisions without delegating them to individual portfolio managers, supported by a research team that will soon be further expanded.
We do not allocate by asset class, but according to our five strategies. The weights of the strategies vary according to market cycles, but two are the core of the portfolio: “Compounders,” consisting mainly of equities for long-term growth, and “Income,” which replaces the fixed-income component of a traditional portfolio and seeks income streams by investing in high-yield corporate bonds, but also, for example, in real estate and equities.
The other strategies meet diversification needs: the temporal one is entrusted to “Macro,” which operates on currencies, rates, and equity indices from a short-term perspective. Diversification in terms of decorrelation to market direction makes use of two strategies: “Special Situations,” which takes a bottom-up approach and is linked to idiosyncratic situations involving individual companies, such as mergers and acquisitions or “distressed” assets, and “Alternative Risk Premia,” which invests in precious metals/real assets, such as listed infrastructure, and other uncorrelated investments such as volatility. Finally, the protection of the portfolio, which is characterized by the prudent use of leverage and high liquidity, also relies on hedging, which aims to optimize its convexity by allowing us to benefit from market upturns and contain losses in acute downturn phases.
Looking beyond the usual measurements of risk parameters in allocation, for us, the main risk is not meeting the return targets we set.
It is marked by transparency and analysis. Because our management is particularly active, we constantly update investors on portfolio choices by clarifying what expectations and according to what macro and micro view we have made our choices
Ours is a marathon, not a sprint: we will do the real balances at the end of the fifth year, but certainly what we have achieved so far fills us with satisfaction, and the portfolio has shown itself to be efficient in phases of market stress.
By Constanza Ramos
By Constanza Ramos