Pharus Sicav Liquidity. The alternative to the bank account.

30 September 2022 _ News

Pharus Sicav Liquidity. The alternative to the bank account.

Inflation above 9% and rising interest rates inevitably affect the assets of businesses and households.

On the one hand, inflation can have a corrosive effect on the money deposited in savings accounts due to the rise in the price of goods and services. On the other hand, the surge in prices associated with the rates increase by Central Banks negatively affects financial returns.

These two elements combined lead to the erosion of the real value of savings.

If we also consider that in Europe the money deposited in the bank is guaranteed up to € 100,000, the elements of risk increase.

So how to manage excess liquidity?

As a rule, an increase in interest rates should lead to a reduction in the value of bonds, but not if you make a careful selection. In fact, short duration issues and quality companies allow price fluctuations to be absorbed in a short time, making it possible to obtain interesting returns with a very low level of risk, especially in a context that already has enough risks.

And it is on these principles that the allocation philosophy of Pharus Sicav Liquidity is based. A short-term bond fund, the first from Pharus, with over 20 years of track record, of which 19 of positive results.

The fund currently invests in bonds well-diversified both geographically and sectorally, with a duration around one year, focusing on solid companies, with an average BB rating, and with a current internal yield of 4.10%.

The management team identifies the market opportunities by combining two objectives: maximize the risk / return (the so-called spread duration) and define the quality of the companies (the so-called 'selection'). To do this, a proprietary valuation system is combined with both a top down and a bottom up approach.

The top down approach is based on three actions: macro analysis of the current economic cycle; sectoral analysis in terms of risk / opportunity ratio; country risk analysis, especially for lesser known and more distant economies. In other words, the conditions that lead to having the maximum return for the best level of risk.

The bottom up approach, on the other hand, starts from the analysis of companies. The proprietary rating allows to apply a more consistent and precise criterion than the mere external judgment of the rating agencies and also allows to take into consideration the world of companies without a rating, but full of opportunities.

The objective of Pharus Sicav Liquidity is therefore to offer a stable portfolio with a strong focus on risk, to be prepared especially in less favorable economic cycle phases such as the one we are experiencing, thus constituting a valid alternative to the bank account and the risks associated with it.


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