Asset Managers

In its outlook for 2022, JP Morgan Asset Management makes no bones about the fact that equities remain attractive, even if inflation sticks around a bit longer than expected. In times of inflation and negative real interest rates, equities have almost never given a negative return in the past, according to JP Morgan’s outlook with chief strategist Vincent Juvyns (photo).

It was the week of the central banks. The Bank of England raised interest rates by 15 basis points, the US Fed hinted at three rate hikes and a reduction in the buy-back programme. What exactly the ECB is aiming for is not entirely clear to market analysts. One thing is clear: a rate hike is the ultimum remedium for the central bank of President Christine Lagarde. 

The yield curves on the global bond markets flattened dramatically during the second half of October. When flattening is followed by inversion of the yield curves, a recession is inevitable. This ominous development is causing concern in the market, but are the concerns justified?

The business outlook for next year is characterised by concerns about inflation. Is it a temporary phenomenon linked to problems in the supply chain as consumer demand has picked up again this year? Or is it permanent? Central bankers are considering their usual anti-inflation tool, interest rate hikes and the removal of public measures to stimulate the economy. According to US economist Robert Reich, the real problem is more a matter of regulatory failure in the area of competition law.

Quiet optimism in the Luxembourg fund industry suggests that proposed tweaks to the ELTIF regime could unlock this concept’s potential. Wealth managers report growing demand for funds that can give clients exposure to alternative strategies, and new suggested changes could do the trick.

With a return of 46 per cent year-to-date, the ACATIS Datini Valueflex is on a roll this year. The 10 per cent allocation to cryptos, via an investment in three crypto ETFs and a direct investment in Coinbase, have helped considerably. But at the top is vaccine maker BioNTech, which is responsible for 11 per cent of the return, according to a conversation with fund manager Hendrik Leber (pictured), who called the fund the “chilli pepper of an investment portfolio”. 

The ongoing, rapid consolidation in asset management is exposing problems around rebranding. “Crucial” is untangling one’s own story from broader sector narratives, in this jumble of mergers and acquisitions. 

It takes a lot of guts to come up with the proposition that this is the moment to shift the emphasis from growth to value stocks. But John Bailer, US equity income manager at Newton Investment Management, is certain. The reason: structural changes in the macroeconomy. Soaring inflation, for example, is giving rise to a veritable “value renaissance”.

Cryptocurrencies are causing the European Central Bank increasing concern. This exotic market segment operates outside the domain of central banks and, according to specialists, can undermine monetary and financial stability. This form of alternative liquidity is a highly undesirable development, according to Sylvester Eijffinger, emeritus professor of financial economics at Tilburg University and visiting professor at Harvard University’s economics department.

In the Luxembourg financial and innovation sectors, blockchain is often discussed a key element in the financial industry’s future, mentioned alongside artificial intelligence as a way of promoting digitalisation and cutting unnecessary costs. But some who are familiar with the technology as part of the Bitcoin cryptocurrency have said that blockchain is a poor choice for this sort of application.