Economic growth is slowing down worldwide, inflation is rising again and central banks may tighten their monetary policy. So there are good reasons to become a little more cautious. More than ever, it is therefore essential to know how to select the securities (stocks or bonds) that can best withstand a difficult environment. With its systematically quality-oriented investment style, the ODDO BHF Polaris range of multi-asset funds aims to identify long-term opportunities, even in times of increased volatility. However, it should be borne in mind that the ODDO BHF Polaris range carries a risk of capital loss. So how do you recognize a "quality" investment?

Focus on quality assets

“Quality" stocks are those of companies whose growth is, according to our analysis, steady and less cyclical. To do this, we focus heavily on the fundamental analysis of each selected company. In the current environment, we focus in particular on their potential resilience to economic or external shocks (oil prices, impact of the Covid-19 pandemic...). These companies have, in our view, the potential to prevail even in a difficult competitive environment, and the preconditions that allow this are often linked to the existence of strong "barriers to entry" such as brand power or patent protection.

But quality stocks can also be expected to show long-term growth potential through direct exposure to the major trends of today and tomorrow.

Riding the wave of long-term trends

According to our analysis, some sectors of activity are less affected than others by economic cycles because they are part of a long-term potential growth trend. This is the case for sectors related to digitalization, technology and medical research. The same is true for new consumer trends such as e-commerce and contactless payments, as well as sectors that participate in the increase of household consumption in emerging countries.

Thus, when stock market valuations are high, it may be wise to invest in companies that are present in these long-term growth trends. In fact, according to our analysis, these stocks can cope more easily with short-term market declines thanks to their cash flow visibility. They are therefore a potential driver of long-term performance*.

Choose a multi-asset fund with a suitable risk profile

The ODDO BHF Polaris range is in line with this logic. It comprises four funds with very distinct risk profiles, defined by their range of exposure to equity markets. Moderate, Balanced, Dynamic or Flexible, the ODDO BHF Polaris funds apply the same rigorous company selection and risk management. In line with a long-term investment approach, all funds also take into account environmental, social and governance aspects in their selection process of equities and corporate bonds. Derivatives may be used to counteract short-term fluctuations in the market environment. The advantage of selecting quality equities lies, according to our analysis, in their ability to bounce back from market shocks, even if they may experience strong short-term downward fluctuations in the midst of a market storm.

* Past performance is no guarantee of future performance and is not constant over time.