CONVERGENCE

The strategy of this profolio is to determine temporary deviations in long term pricing ratios between comparable asset classes. The assumption is that the ratios will converage towards their long term average over the course of the coming period. Possible assets include: Pair of stocks, -indices, -currencies, -interest rates, -volatilities.. At initiation of this portfolio (September 2018), for instance, it is assmued that there is a gap in company valueations between US- and EU stocks which will converge over the course of the coming quarters/ years. The recent price development is abnormal. Last time seen during the Euro crisis. There are signigicant challenges for Europe (i.e.: Brexit, Italy, Turky). However, this strategy assumes things will play out better then expected and market pricing will converge. To yield the associated exposure, this porfolio invests (amongst others) primarliy in ETFs and Options. Example: Long ETF in EUROSTOXX 50 & SHORT ETF in S&P 500 Exposure can be increased by leverage either side or adding options and/ or other stuctured products temporarily.