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Epsilon Defense 100 Reserve: Complete Opinions

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Epsilon Defense 100 Reserve: Complete Opinions

Independent Financial Advisor and Co-Founder of Affari Miei

7 December 2023

If you are interested in investments and mutual funds and you have the opportunity to invest in Epsilon Difesa 100 Reserve (ISIN IT0005558868)perhaps before choosing it it will be useful for you to read one review of the fund with all its characteristics and opinions about it.

Today we will analyze together the KID (Key Information Document) and we will therefore see all its characteristics in detail, focusing above all on costs and risks.

Let’s start!

This article talks about:

A few words about Epsilon SGR (Eurizon)

The name of the fund is Epsilonbut the KID can be found on the official website of Eurizon: since 3 June 2019, in fact, this company has been 100% controlled by Eurizon Capital SGR, which before this date held 51% of the shareholding.

To date, however, it is controlled by Eurizon, which is part of Intesa SanPaolo and deals with investments and the distribution of financial instruments, especially mutual investment funds.

It is the leader in Italy for assets managed in Italian funds, and at the same time has a widespread international presence.

This allows it to innovate, grow and expand its business.

It is also important to underline that in the selection of financial instruments it pays close attention to ESG criteria and SRI principles.

Assets under management currently amount to 389.1 billion euros.

Here you will find an overview of all Eurizon funds.

What does a fixed-term fund mean?

Before we begin with our fund analysis it is important to understand what does a fixed term fund mean? and because this fund has a predefined time horizon.

It is a fund characterized by the presence of a period which defines when you can purchase the fund: it is the subscription period, i.e. a period that defines the time terms of the investment, i.e. the investment cycle.

In this case the period of subscription runs from September 26, 2023 to December 12, 2023.

The investment period instead begins on 13 December 2023 and ends on 30 September 2025 (just under 2 years).

Identikit of the Epsilon Difesa 100 Riserva fund

The fund aims to achieve limited growth in invested capital and also to minimize, through the use of particular management techniques, the probability of losing invested capital.

Let’s see how theprotection objective:

The value of the protected share, the protected value, is equal to 100% of the highest unit value of the fund share recorded during the subscription period; The day on which the value of the fund share is protected is September 30, 2025, the fund’s maturity. On other days the value of the share is not protected.

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What he invests in

The fund invests in financial instruments of a bond/monetary and equity nature; the latter up to a maximum of 30% of the activities. For the bond part Issuers other than Italian ones with a rating lower than investment grade or without a rating (and therefore significantly exposed to credit risk) are chosen for up to 20% of the assets.

There is no limit regarding the creditworthiness of Italian issuers. With reference to the bond component, investments are mainly made in Italian government bonds, with a maximum of 20% in bonds Emerging Countries.

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Exposure to currencies other than the euro cannot exceed 30% of assets.

For the shareholding part instead, preference is given to shares of international companies that generate a significant part of their turnover from activities linked to products and/or technologies aimed at safeguarding the environment, such as for example the development of alternative energies, waste and water treatment, circular economy.
The protection objective is pursued through investment in bond instruments with maturities generally close to that of the fund’s investment cycle.

The benchmark

The index that is taken as a reference to have an overview of the fund is the benchmark. Epsilon Difesa 100 Riserva is instead actively managed without having a reference to any benchmark, with a style of flexible management.

This is reflected in the investment.

The investment horizon

This fund is not suitable for investors who want to withdraw their capital within 2 years, i.e. before the expiry of the fund’s investment cycle, set for September 30, 2025.

Subscription, exit and use of proceeds methods

Epsilon Defense 100 Reserve it can be subscribed in a single solution, therefore in different ways PICwith a minimum investment of 500 euros.

Regarding the distribution policy, this fund is income accumulating, as the coupons are not distributed to investors, but are instead accumulated in the fund itself to grow capital and harness the power of compound interest.

The risk profile

It is very important to consider what the risk profile of the fund, to better understand whether it is a product that can be included in our strategy or whether the risk is not consistent with what we are looking for or with our objective.

This fund has a risk rating of one level 2on the risk scale ranging from 1 to 7.

This is a low risk profile, so potential losses due to future performance of the product are rated at a low level, and it also means that it is very unlikely that poor market conditions will affect your ability to repay your invested capital.

The risk indicator refers to maintaining the product for at least 2 years.

What are the costs?

This part is also very important: knowing how much an investment will cost us is essential to evaluate its opportunity and consequently also the probable and possible returns.

I costs have an impact on them, so if you know you will obtain returns of a certain level it is good that you know what costs you will incur in order to balance everything.

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Are not expected entry costsso when you choose the amount to pay to start your investment no amount will be withheld from you.

But there are gods exit costs which amount to a maximum of 1%: if you request to exit from 13 December 2023 to 29 October 2024 then you will pay a rate of 1% while if you exit the investment from 30 October 2024 to 23 September 2025 you will pay 0.50% , if you leave after September 24, 2023 then you will not have to pay any amount.

The management fees instead they are equal to 0.74% of the value of the investment per year, whose commission is 0.20%. This is an estimate based on the fund’s costs.

The performance fees are not foreseen.

If you want to delve deeper into the topic of costs and their impact, I recommend our free report in which we explain the true impact of costs on a portfolio.

Historical returns

It is usually useful to also take a look at the past performance of the fund to get an idea about its results and trends.

Epsilon Defense 100 Reserve it has only been operational since 26 September 2023, so there is no data available that could allow us to make a comparison; Despite this, it is still worth reiterating that past returns are in no way predictive of future ones and that they are useful for comparison, but not to be taken literally.

Performance scenarios

From 2023 it is mandatory to include on the KID a part relating to performance scenarios.

It is a mirror that shows the potential returns of the investment if certain market conditions occur.

First I attach the screen taken from the KID, then we’ll comment on it together:

The simulation it is carried out on a hypothetical initial investment of €10,000 held for a period of slightly less than 2 years, which is the expiry time of the fund.

As you can see from the table, the scenarios that arise are these:

Stress – In case everything goes wrong, we could reach a loss of -4.11% in the first year and get 0.33% after 2 years; Unfavorable – The loss could reach -3.28% in 12 months and be limited to +0.3% in 2 years; Moderate – The average case expects a gain of 0.43% in the first year and an appreciation of 2.91% in 2 years; Favorable – In the best case scenario we could have a revaluation of +2.40% in one year and +7.45% in 2 years.

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Affari Miei’s opinions on the Epsilon Difesa 100 Riserva fund

We have reached the end of the analysis of the fund, so we can try to draw our own conclusions.

If you have already read my other content, you may already know what I think of these funds. In my opinion, these are inefficient and ineffective products, since I consider them profitable more for the companies that place them than for those who invest in them.

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In addition to this there are the charges that you will have to bear if you opt for an investment of this type.

I know we have already talked about management costs, but to learn more I recommend you download our free report in which we explain in detail the critical issues of actively managed mutual funds.

These costs arise from active managementwhich in our opinion is not the best possible choice to make, given that it often turns out to be not very transparent and ineffective.

For this fund we cannot point out all the “guilt” to costs, because there are funds that have much higher costs.

Indeed, to be honest, a similar fund cannot be advised against to all investors, in fact I am not telling you not to subscribe to it.

It wouldn’t be fair for me to make similar judgments as I don’t know your personal situation, much less your financial one, so I can’t tell you “yes, invest” or “no, don’t invest”.

If you are looking for a comfortable investment from to delegate because you don’t have time to follow or you aren’t ready/prepared enough, then this could certainly be a tool that’s right for you.

Despite this, I can lead you to reflect on the various alternatives you can choose.

For example the rise of the Exchange Traded Fund (ETF), introduced a solution that challenges the traditional approach to mutual funds.

Here on Affari Miei we usually pay a lot of attention to these instruments, as they often offer lower management fees and greater liquidity, arousing interest among those looking to optimize their investments.

I can also invite you to make an in-depth comparison by downloading the free report in which we go into detail on the critical issues related to actively managed funds.

Thanks to this you will be able to have clearer ideas; Lastly, I advise you to study and train to gain greater awareness of the financial markets and better understand this world.

The most dispassionate advice I can give you is to study and train yourself, because study and knowledge are the light to follow to best orient yourself in the complicated world of investments.

Conclusions

Now that we have truly reached the end, all I have to do is say goodbye and leave you some more guide profits with which you can begin your investment journey on the financial markets:

Happy continuation on Affari Miei!

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