The 18th edition of the European Funds Trophy, which , was held in Paris on 7 March 2024. This year, the independent boutique Eleva Capital was the Luxembourg winner in the category of asset managers with 4-7 ranked funds.

With its main base in Paris, Eleva has recently opened a commercial office here in the grand duchy. Delano sat down with Pierre-Louis Chandelier, head of institutional clients for the French-speaking market, and the Luxembourg-based Magali Di Filippo Hamon, who handles investor relations for Luxembourg, Belgium and Switzerland and who joined the firm earlier this year, to hear more about Eleva, its strategy and the asset manager’s partnership with Unicef.

“Strong investment process that has been stable over time”

According to the Fundclass methodology, which determined the winners of the European Funds Trophy, funds that they rank as “five-star funds” perform better than four-star funds, which perform better than three-star funds and so on. Poorly-performing funds are instead assigned negative ratings.

Funds are evaluated over a period of several years and through different market conditions, with the number of five-star funds indicating the difficulty, or complexity, of the market. In 2023, 3.9% were five-star funds. Amongst the seven Eleva funds that Fundclass ranked, one was a five-star fund, five were four-star funds and one was a two-star fund.

So how does Eleva feel after winning this award?

“We are really happy and really honoured to receive this award,” replied Chandelier. “It’s a recognition from the industry of solid and sustainable work, and a track record of our main strategies. I think it’s the result of a strong investment process that has been stable over time, and strong risk management as well.”

Founded in 2014, the firm is “flexible” in its approach. Its main funds were “soft-closed very early to leave room for existing investors to keep on investing,” but “we decided to launch new strategies by adding new expertise,” explained Chandelier. A small- and mid-cap team joined Eleva in 2018, followed by an impact team, a fixed-income team and a global multi-asset team. “The idea is to keep on growing by adding expertise and create synergies between the team.”

Eleva’s Sicav (société d’investissement à capital variable) is a Ucits fund that has been based in Luxembourg since inception, said Chandelier. “We have an investor base in Luxembourg that has been growing over time,” he added, and they’re currently in the process of opening a commercial office in the grand duchy. With Di Filippo joining the firm at the start of 2024, “we are really happy to have a local presence,” he added. “Our ambition is to keep on strengthening our commercial support to existing investors and to explore new business opportunities, especially for our strategies launched over the past few years.”

Recognising smaller asset managers

The Fundclass methodology categorises asset managers based on the number of funds they manage. Why is it important that smaller firms--and not just larger ones--receive recognition?

“There’s a shift from active to passive funds, and that shift has been accelerating,” said Chandelier. “We think that portfolio allocators and portfolio managers need diversification and investment buckets with pure alpha generation and storytelling as well, for the clients. We think that this is usually the business territory of smaller asset managers--in particular, independent boutiques, where skin in the strategy aligns interest with their investors.”

And many investors, moreover, may not have a small boutique like Eleva on their “radar screen” because they’re only monitoring big companies, noted Di Filippo.

What makes Eleva stand out?

When it comes to the aspects that distinguish Eleva, “flexibility is really part of the DNA of Eleva Capital and our main strategies,” said Chandelier. The firm’s founder Eric Bendahan is “style-agnostic,” meaning he’s able to quickly shift the investment style and level of cyclicality in a portfolio, depending on the macro-economic situation. “And this is done in a combination of both a top-down approach and a bottom-up approach.”

Good companies are not immune to the effects of difficult economic environments, he noted. “Even a good company can be very cyclical, and when the cycle is turning down, it’s better to be out of this stock,” making flexibility key.

The firm has also developed a “proprietary tool” called the Eleva Capital index, which aggregates several indicators and signals trend reversals. “It’s really helpful when there’s an inflection point on the macro, and it has really ensured [that we] capture interesting momentum in the markets.” The tool can’t predict events like Vladimir Putin’s full-scale invasion of Ukraine, he cautioned. But when the covid-19 pandemic led to lockdowns in China and had an impact on commodity prices, the “indicators” were already down in early 2020. Then, there was “a big, positive inflection point in April 2020 that helped us position the portfolio more cyclically, in a moment where it was complicated to be constructive on macro.”

“There’s a strong and granular work as well on portfolio construction and optimisation that is done by the management team, in order to limit specific risk and limit drawdowns on the absolute return strategy,” Chandelier added.

Unicef partnership

Another aspect that makes Eleva Capital unique is its partnership with Unicef, argued Chandelier. The Eleva Foundation is actually the company’s second-largest shareholder. “It was really important to share and link the potential success of the company with a philanthropic project.” Every year, 9.9% of Eleva Capital’s profits are donated to the Eleva Foundation to support the children’s organisation Unicef, with projects voted on by the asset manager’s employees.

Some of the projects include, for instance, providing safe water in Madagascar, vaccination campaigns in the Democratic Republic of the Congo or reducing newborn deaths in Tanzania, Di Filippo pointed out.

Geopolitics and central bank rate cuts

Asked about the rest of the year, Chandelier warned that he wasn’t going to say anything very “original.” “As everyone else, we are monitoring geopolitical situations in the Middle East, in Ukraine, and of course we are also monitoring the changes of central bank stances and the rate cuts to come.”

“We also have a lot of political elections [this year],” he added. “We have the US, but we also have it in Europe. We know this can have an impact on economic and fiscal policy, an impact on trade and diplomatic relationships. So we will be closely monitoring that.” But with Eleva’s flexible and “nimble” management style, “the idea is to adapt the portfolios and portfolio construction to new market conditions.”

This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. .