ELEVA Absolute Return Dynamic

The ELEVA Absolute Return Dynamic fund is managed by the same team as the soft-closed Europe fund, with several subtle changes. The strategy aims to leverage ELEVA's skills and expertise in European equities while also allocating to international equities. The core premise remains consistent, focusing on capturing alpha from both single stock long and short positions while limiting market risk. Net exposure is a key differentiator, with the dynamic fund ranging from -20% to 100% (though expectations are more likely between 10%-70%). This range is driven by fundamental idea generation, top-down analysis, and market volatility. The fund also targets an annualised volatility of 8-12%. The investment philosophy remains unchanged. The long book targets family or foundation-owned businesses, companies with a differentiated business model in mature industries, and companies undergoing significant management or shareholder changes. The short book consists of companies in long-term challenged industries, companies at a negative inflexion point, or those with elevated expectations. Additionally, the credit market is utilised as a tool for evaluating companies on both sides of the book. The process begins with the filtering of 21,000 global equities, with the long book requiring a market cap of over €5bn or, if not, sufficient top-line growth and a strong balance sheet. ESG exclusions help to narrow this further (given it is Art 8) to create a focus list. A bottom-up fundamental analysis process is undertaken, combined with market perception analysis (e.g., meeting sell-side analysts, assessing credit market sentiment), culminating in the creation of price targets with a two-year horizon. Portfolio construction targets the best mix of stock-specific opportunities at any given time, with stock weightings based on expected return, risk/reward profile, and conviction. Typically, they expect to hold 50-60 names on both the long and short sides of the book and will use index futures to complement single stock shorts where appropriate.