Swiss Life Investment Review 2022 part 2 – Asset Classes

Swiss Life Investment Review 2022 part 2 – Part one is here.

Asset Classes

Swiss Life Asset Managers specializes in the development and management of bespoke and bespoke investment solutions for institutional clients. These decisions are based on target return, acceptable risk level, and investment horizon. They include global solutions, individual asset classes, and individual investment concepts and strategies.

Real Estate

Swiss Life Asset Managers is one of the leading European real estate investors with over 125 years of property management experience.

Swiss Life Asset Managers is one of Europe’s leading institutional real estate investors and real estate investment managers with offices in six European countries.

Swiss Life Asset Managers is one of the leading institutional real estate asset managers in Europe with offices in Switzerland, France, Germany, Luxembourg, the UK, and Norway.

The real estate asset class is very important to Swiss Life Asset Managers. They hold it for the benefit of the insured with them, who, thanks to their investment horizon and sustainable use of the real estate, are well suited for long-term obligations arising from their insurance business.

They also offer their third-party clients investment solutions that we have already successfully implemented on our insurance balance, thus providing them with unique access to the European real estate market. This is in the form of collective investment decisions, club deals, and joint investments. This allows them to support the clients in achieving their long-term financial goals.

Selected Real Estate Strategies

Swiss Life Asset Managers offers selected investment strategies for investments in various real estate asset classes.

European Thematic ESG Revenue and Growth Strategy

• Swiss Life Asset Managers invests in commercial real estate in locations that can attract demand through structural changes.
• When choosing a location, they consider changes in the thematic areas of destruction, climate and environment, communities and groups, consumers and lifestyles, and connectivity.
• The focus is on key European countries as well as smaller established markets (Nordic countries, Benelux, Southern Europe, Ireland, Austria).

European balanced investment strategy program

• Swiss Life Asset Managers offers clients balanced real estate investment strategies.
• They invest in European real estate in the classes of office, residential, industrial and logistics, retail and medical assets.

European Industrial and Logistics Strategy ESG

• They invest in a distribution-oriented portfolio with industrial and logistics facilities.
• The focus is on real estate investments in Germany, France, UK, Switzerland and the Benelux countries.
• By combining small industrial facilities with large logistics facilities, they achieve broad market coverage with above-average profits and below-average revenue volatility.
• The strategy has a defensive focus, which is appreciated by institutional investors in the current market conditions.
• As industrial and logistics facilities will benefit from various megatrends in the coming years, we expect significant upside potential.

Equities

The investment strategy of Swiss Life Asset Managers is focused on sustainable and attractive risk-adjusted returns that meet the long-term financial needs of their clients. The company rely on systematic selection of securities, strict risk control, operational excellence, and the integration of ESG criteria for their implementation.

To ensure sustainable and competitive performance, they pay special attention to research and development. The investment models are based on a rigorous research process that identifies and systematically exploits market inefficiencies.

Thanks to a high degree of automation, they make their processes more efficient, safer, and more precise. They actively promote in-house development of customized IT solutions – for strategic use as well as portfolio implementation and monitoring.

Because they want to be in line with our social responsibilities, they put a lot of emphasis on ESG analysis. Constantly looking for and evaluating innovative solutions, they want to further expand the competitive advantage in sustainability.

The investment process evaluates market opportunities using quantitative methods and modern IT technologies. But before the results can be included in the models, they must be economically justified.

They use a bottom-up approach to their investment process that prioritizes stock selection. When structuring our portfolios, they pay special attention to the correct distribution of risks and the prevention of unwanted risks.

The portfolio managers work closely with their analysts. They focus on operational portfolio management; this includes monitoring and reviewing their effectiveness, as well as following up on analyst recommendations. The analysts, on the other hand, are engaged in long-term innovation projects and the development of IT tools. The overlapping tasks of the two teams encourage creative dialogue and improve the performance of our models.

A Brief Overview of the Investment Strategies

• Diversified regional strategies that outperform others.
• Protective capital solutions to reduce drawdowns in negative market phases.
• Thematically oriented portfolios (for example, ESG).
• Professional and private investors can also invest in collective investment vehicles.

Infrastructure

Swiss Life Asset Managers is one of Europe’s leading infrastructure asset management companies. They have a long-term infrastructure investment horizon, combining deep industry knowledge and experience with reliability and sustainability.

The infrastructure investment platform

At Swiss Life Asset Managers, they identify, acquire and actively manage investments in infrastructure assets and companies in OECD countries on behalf of clients. They strive to create diversified portfolios with a long-term horizon.

Launched in 2011, the Swiss Life Asset Managers infrastructure platform offers institutional investors efficient access to different regions and sectors within the infrastructure asset class.

Over the past 10 years, their highly skilled team has invested in infrastructure for their insurance and third-party clients, drawing on their collective infrastructure experience to achieve an excellent track record. Investors benefit from the in-depth knowledge of the sector, the strong, established global networks, and the substantial, long-term involvement of the Swiss Life Group.

Investor’s offering

1. Direct unlisted portfolios of infrastructure assets

• Closed investment funds
• Individual managed accounts
• Co-investment programs

2. Unlisted multi-manager infrastructure solution

• Closed fund of funds
• Open fund of funds with liquidity characteristics

3. Active in the following sectors

• Clean energy and energy
• Utilities
• Communication
• Transport
• social infrastructure

Investment Strategies

• Core and Core+

The investment strategy of Core and Core+ is targeted at companies with the following characteristics: strong, long-term cash flows backed by real assets, high barriers to entry, significant potential for value appreciation through active management, adverse P90 capital protection scenario, high returns, focus on regulated industries, concession contracts, PPPs and PPAs, and revenues often indexed to inflation.

• Value-added

Value Added investment strategy focuses on unquoted assets and companies with the following characteristics: strong long-term cash flows backed by real assets, high barriers to entry, significant potential for value appreciation through active management, strong growth driven returns and investors benefit from capital gains, high cash returns and income often associated with inflation.

• Clean energy

Investments include assets and projects in the field of: hydropower, wind power, power grids, local and district heating networks, solar power plants, waste processing, energy recovery, other energy or energy efficiency facilities. The company currently owns several renewable energy assets in our portfolios and have a wealth of experience across all sub-sectors. They are implementing it in three different ways: a dedicated European clean energy infrastructure strategy, a dedicated Swiss clean energy infrastructure strategy, and direct investment in clean energy and renewables for our global infrastructure funds.

• Swiss Clean Energy Infrastructure

As part of their investment proposal, they have a dedicated team dedicated to direct investment in the Swiss clean energy space.

• Funds of funds

As part of the Fund of Funds strategy, the company offers access to a broadly diversified portfolio of Core, Core+ infrastructure funds, and complementary infrastructure funds across Europe and North America in key infrastructure sectors. They prefer to invest with highly qualified, reliable external investment managers who demonstrate a strong and successful track record. They also use their extensive private equity experience to find attractive co-investment opportunities within the strategy.

Responsible Investment

For Swiss Life Asset Managers, responsible investing is the solid foundation on which they build the business and, last but not least, an important element of their fiduciary responsibilities.

ESG integration and climate change

Managing risks and opportunities sustainably across cycles is deeply rooted in our corporate DNA.

They have developed Swiss Life Asset Managers’ investment strategy with a long-term and sustainable outlook that is in complete synergy with our insurance commitments. In addition to integrating environmental, social, and governance (ESG) aspects into all core activities, we are undertaking various initiatives that go beyond standard integration.

For us, as an asset manager committed to our fiduciary duty, responsible investing is not only a means of redirecting capital flows towards sustainable development but also an important tool for seizing investment opportunities and reducing the associated risks for our investors. We believe that smart, sustainable investment decisions prove effective in managing risk and delivering more sustainable returns precisely because they support and fund companies that benefit society and shareholders.

ESG concept

Our long tradition of sustainable investment is firmly rooted in our corporate DNA. Over the past years, we have expanded and strengthened these values ​​to create a comprehensive approach to responsible investing. This means a clear vision of ESG built on the three pillars of corporate responsibility: fiduciary duty, intergenerational responsibility, and active management.

ESG in Securities

We have launched a program of “green” investments in the field of securities. Our goal is to increase investment in green bonds to CHF 2 billion by the end of 2023, in line with the ICMA Green Bond Principles. We have also formalized a strategy to phase out thermal coal for the bond portfolio, facilitating the transition to a more resilient and low-carbon economy and avoiding asset default risk. Over the past year, we have reduced our exposure to companies that derive 10% or more of their revenue from thermal coal (either from mining or by selling it to external parties) to 0%.

ESG in Real estate

As we place a strong focus on sustainability, one of our top priorities is to improve the energy efficiency of our extensive real estate portfolio. Swiss Life Asset Managers is committed to acquiring assets that already have strong on-site energy efficiency and renewable energy production. We are also actively refining less performing new acquisitions or permanent portfolio assets. A key component of our climate strategy is the monitoring of an extensive set of indicators. We closely monitor the energy consumption and carbon emissions of our real estate portfolio in line with TCFD guidelines.

ESG in Infrastructure

We pay special attention to the opportunities for transition to low-carbon technologies in our infrastructure activities. This approach is particularly evident with our recent acquisition of Fontavis, an infrastructure investment company specializing in clean energy. As the fight against climate change continues to make fundamental changes to business models in all sectors, as well as society at large, the transition to a low-carbon economy creates great opportunities for infrastructure assets. For us, areas such as renewable energy, clean technology, and logistics represent key areas of opportunity.

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