Asian equities
“Asia is a region where we believe active management can generate meaningful alpha over full market cycles,” says Armstrong. The highest conviction position is in Japan, followed by India where local currency weakness has reduced recent returns. Broader Asia-Pacific exposure also includes global technology names in Korea and Taiwan.
Asian equity allocations are mainly through Dalton Investments funds, including regular UCITS Hedge performance award winner Lafayette Dalton Asia Pacific UCITS. Patrimoine has invested in “early bird” share classes of Dalton funds offering lower fees to all investors but has no preferential fees or rebates.
Sanso Longchamp exchange views with Dalton on Asian names and has taken a direct position in Samsung GDRs to play the Korean equity market. “Samsung was simply the most straightforward way for us to gain exposure to the South Korean equity market given the weight it represents in the KOSPI Index – the single most influential stock in the market,” points out Armstrong.
Single stock exposure is capped at 10% and separately from their fund selection team, Sanso Longchamp has a dedicated internal equity team focused on US and European markets. For instance, Sanso Longchamp has some exposure to a small Swiss financial, Leonteq, which is a way to get Swiss Franc exposure with a higher yield. This position, with a market capitalisation of CHF 240 million, is roughly the smallest they would invest in. In contrast, the largest French-headquartered bank, BNP Paribas, was added in October following its underperformance of SX7E (Euro Stoxx banks index).
Bank equities
Yet in 2025 Sanso Longchamp played European bank equities mainly through structured products rather than direct equity holdings, to combine attractive carry income with convexity and a controlled risk profile. “We bought autocalls, which offered high coupons in exchange for taking a view on the stability of a basket of bank equities or indices. We used dividend-linked autocall formats, designed to monetise the strong dividend outlook in the sector while providing an additional layer of yield enhancement or downside mitigation,” explains Armstrong.
Patrimoine has not however had any material weighting to the other stand-out European equity sector, defence (except for some indirect exposure via Airbus).
Trading the convexity and volatility of structured products
Sanso Longchamp are expert in managing the multi-dimensional exposures of structured products by using additional derivatives to manage convexity as well as tactically timing trades.
“Structured products can offer attractive asymmetry, but their profile needs to be managed carefully. In particular, autocalls provide limited upside in strong bull markets, while their short-spot and short-vol characteristics can become challenging in sharp sell-offs. This is why we place significant emphasis on managing their convexity,” points out Armstrong.
For example, to enhance the payoff profile, Longchamp also use outperformance certificates – essentially leveraged calls – to capture more upside and mitigate the “capped” nature of traditional autocalls.
In addition, Sanso Longchamp participate in the secondary market during periods of stress. “Structured product NAVs can trade at meaningful discounts and buying into dislocated pricing creates opportunities to improve asymmetry,” says Armstrong.
