Top-down: Themes identification and segmentation

We are permanently monitoring technological breakthroughs, consumer behavior trends and regulatory changes in order to pick promising investment themes at an early stage.

The themes that are selected must be disruptive by nature in order to offer high growth rates over secular investment horizons.​

In collaboration with our network of contacts (private equity investors, start-ups, industry experts), we then perform a top-down fundamental analysis to determine the maturity level and hence the growth potential of the themes under consideration.

A segmentation into sub-themes is also realized, each sub-theme being assessed and then further segmented into very specific pockets in order to have a high allocation granularity.

This step is key in our initial top-down process because it will be used to monitor the themes’ evolutions in order to optimally position our portfolios over the themes’ different life-cycle phases.

Bottom-up: Focus on pure players

The topological framework generated by the top-down process is then used to fill every themes’ buckets with publicly listed equities. At this stage, the only criteria that candidates must fulfill is thematic purity. This means that the selected companies must derive a major part of their revenues from services and/or products in direct link to the considered themes.

This large stock universe is quantitatively tracked and used as a thematic dashboard.

Our bottom-up process then continues by the reduction of the global data set into an investable universe of an average of 150 stocks per theme. Here, we skip the candidates that do not respect our risk management boundaries, mainly in terms of market capitalization size and trading liquidity volume.

Our proprietary multi-factor selection tool helps us to rank this investable universe by using the companies’ revenue growth rates, the trends in their operating cash flow margins and R&D budgets just to name a few factor examples.

Finally, the best candidates are going through a financial (DCF, balance sheet quality, sub-theme ratios…), competitive and technological analysis in order to build concentrated portfolios holding between 20 and 40 names.

The portfolios’ allocations are initially set based on our convictions. In addition, we also use the output of machine learning algorithms to guide us in the portfolios’ final risk optimization.

The resulting concentrated and conviction-driven investment vehicles are then rebalanced according to the themes’ macro and micro news flow as well as to respect our risk management guidelines (position size limits).

Different Solutions For Different Needs

We offer to our clients three types of vehicles/solutions to invest in our thematic convictions:​

. Standard Actively Managed Certificates (or AMCs),

​. Custom-made AMCs,​

. Advisory mandates for institutional clients.​

Actively Managed Certificates are mainly issued by banks providing all the back-office, reporting and trading services required to manage, on a daily basis, active investment strategies.

​Investors’ money held in custodian by the AMCs’ issuer(s) is invested by faithfully replicating the theoretical thematic portfolios/indices managed by Synapse which acts as an advisor.​

AMCs perfectly fit the rapidly changing innovation-based investment universe in which Synapse is evolving due to their very fast time-to-market advantage (issuance takes on average only 2 weeks), flexibility (possibility to hedge currencies, adapt the fee structure…) and inexistent launch costs.​​

Custom-made AMCs are designed to meet the specific investment strategy and constraints of wealth managers and private banks and can be launched by Synapse in conjunction with the issuing bank or launched directly by the client with Synapse acting as an external advisor.​​

Mandates are another solution to provide client-specific portfolio management and conditions to institutional clients.​