Our colleague, Aurel Bernat, CEO of BT Asset Management, gave an interview to the publication Stock Exchange about investments in equity funds, investors' risk appetite, and the returns that can be obtained this way. I have also included the interview here, enjoy 😊!

BT Maxim is a high-risk fund, intended for those who expose themselves to risky assets in the capital markets. Specifically, what are the expectations that an investor in the fund should have, in terms of return and risk?

As a rule, clients who choose to invest in such funds pursue the potential for a high return, possibly double-digit. In this context, they must keep in mind that, in the short term, there may be negative developments, but if they maintain their strategy of investing in the long term, they can achieve the proposed return targets. At the same time, they need to understand that during negative times, volatility is usually high and this can be an opportunity to purchase at good prices, viewed over the long term.

What are the criteria or methods you use to identify companies with the greatest development potential, at undervalued prices?

BT Maxim is a fund with exposure to local stocks listed on the Bucharest Stock Exchange. The analysis department continuously monitors the companies in the market, primarily based on fundamental criteria (financial results, changes in the market in which the company operates), as well as technical criteria (the timing of an increase or decrease in exposure). When we identify a company with growth potential, we move to the next stage, proposing the investment to the Investment Committee.

According to the description on the website BT Asset Management, a priority of the BT Maxim fund manager is the dynamic adjustment of equity exposure, to benefit as much as possible from growth periods, but also to avoid some of the declines during difficult market periods. Can you detail some of the strategies or techniques you use to achieve these goals (reducing losses during market downturns, and benefiting as much as possible from growth periods)?

BT Maxim is an equity fund in which at least 85% of assets are invested in stocks. During periods of market uncertainty, we aim for the stock exposure to be around the minimum level (85%) and keep cash reserves in bank deposits to ensure sufficient liquidity for the fund. The main investments of the fund are in large, stable companies with resilience during crisis periods. In market "boom" periods, we allocate part of the resources to smaller, dynamic companies that have appreciation potential, and the stock exposure is higher.

In BT Maxim's portfolio, the banking sector is the best represented - both at the end of November and last year, three of the top five holdings were banks, with a weight of about 25% of the total assets managed. What are the factors that made you adopt this positioning, in the current context?

Usually, the two local banks listed on the Bucharest Stock Exchange are among the important holdings of BT Maxim, given that they are representative companies for the local stock market. In the last year, we have substantially increased exposure to the third banking issuer (note: Erste Group Bank), with acquisitions made at attractive prices. The appreciation of the securities in the recent period resulted in an increase in the weight of this sector in BT Maxim's assets.

How did the investors of the BT Maxim fund react to the outbreak of the Covid-19 pandemic from February - March last year and subsequently, during the recovery from market declines? How do you explain the trends?

The reactions of investors have been positive, even beyond expectations, considering the context. We managed to have a great stability of the resources invested by them and we even saw additional investments amid declining valuations. The explanation comes from the fact that most stock clients had gone through the experiences of the 2008-2009 period. Crises give birth to investment opportunities, and those convinced of this have continued to be investors.

What advice do you have for someone who has never invested in capital market securities?

When they decide to invest, it is appropriate to diversify the placements. Also, it is very important to be able to invest periodically, recurrently, so as to be able to benefit from the opportunities that arise and to manage acquisitions at attractive prices during moments of negative market evolution. Another very important element is the comfort that clients must have regarding the stock market. Volatility is a good example; we should not shy away from it, but rather understand it as a natural element in a market of demand and supply. However, the main starting point remains the mention that investments in equity funds or listed stocks are long-term placements.