Our colleague, Aurel Bernat, CEO of BT Asset Management, gave an interview to Bursa about investing in equity funds, investors’ risk appetite and the returns that can be achieved. We’re sharing the interview here as well — enjoy 😊!

BT Maxim is a high-risk fund aimed at those who take exposure to risk assets on the capital markets. Specifically, what should an investor in the fund expect in terms of return and risk?

As a rule, clients who choose to invest in such funds are looking for the potential of a higher return, potentially in the double digits. In this context, they need to keep in mind that there can be negative moves in the short term, but if they stick to a long-term investment strategy, they can reach their return targets. At the same time, they should understand that in negative phases, volatility is usually high — and that can be an opportunity to buy at good prices when viewed over the long run.

What criteria or methods do you use to identify companies with the greatest growth potential that are undervalued?

BT Maxim is a fund with exposure to local equities listed on the Bucharest Stock Exchange. Our research team monitors the market continuously, first on fundamental criteria (financial results, changes in the markets where the company operates) and also on technical criteria (timing increases or decreases in exposure). When we identify a company with growth potential, we move to the next step, proposing the investment to the Investment Committee.

According to the description on the BT Asset Management website, a priority for the BT Maxim fund manager is to adjust equity exposure dynamically to capture as much of the upswings as possible, while avoiding part of the declines in tougher market periods. Can you detail some of the strategies or techniques you use to achieve these goals (limiting losses in down markets, and capturing as much as possible of the upswings)?

BT Maxim is an equity fund in which at least 85% of assets are invested in equities. In periods of market uncertainty, we aim to keep equity exposure around the minimum level (85%) and hold cash reserves in bank deposits to ensure ample liquidity for the fund. The fund’s core holdings are large, stable companies that are resilient in times of crisis. In market “boom” phases, we allocate part of our resources to smaller, more dynamic companies with appreciation potential, and overall equity exposure is higher.

In the BT Maxim portfolio, the banking sector is the best represented — both at the end of November and at the end of last year, three of the top five holdings were banks, accounting for around 25% of total assets under management. What factors led you to this positioning in the current context?

As a rule, the two local banks listed on the Bucharest Stock Exchange are among BT Maxim’s important holdings, as they are representative names on the local market. Over the past year, we also materially increased exposure to a third banking issuer (editor’s note: Erste Group Bank), with purchases made at attractive prices. The appreciation of these shares in recent months resulted in a higher weight for this sector in BT Maxim’s assets.

How did BT Maxim investors react when the Covid-19 pandemic broke out in February-March last year and subsequently, during the markets’ recovery from the sell-off? How do you explain these trends?

Investor reactions were positive — better than expected given the context. We managed to maintain a very stable invested asset base and even saw additional investments against the backdrop of lower valuations. The explanation is that most equity clients had already been through the 2008-2009 experience. Crises create investment opportunities, and those convinced of this remained invested.

What advice do you have for someone who has never invested in the stock market?

When they decide to invest, it’s appropriate to diversify their holdings. It’s also very important to be able to invest regularly, on a recurring basis, so they can take advantage of opportunities as they arise and buy at attractive prices when the market is down. Another very important element is the comfort level clients need to have with the equity market. Volatility is a good example — it’s not something to shy away from, but rather to understand as a natural feature of a market driven by supply and demand. The main starting point, however, remains the note that investments in equity funds or listed shares are long-term investments.