Asset Managers

Asset managers are increasingly turning their attention to addressing biodiversity loss, but moving beyond just exclusion and actively making investments that improve the landscape will be an uphill battle. 

It has been a year since a damning report from ShareAction claimed that asset managers are blind to biodiversity loss, which pointed out that none of 75 of the world’s largest asset managers had a dedicated policy on the matter. 

During question time after the Federal Open Market Committee (FOMC) rate decision, Jerome Powell made a very bold statement about monetary policy in the future. When asked when we should expect a less aggressive monetary policy, Powell replied that the economic recovery is far from complete (labour market and unemployment) and that we should not expect any monetary tightening before the end of 2023. 

Allianz Global Investors’ specialists still consider high yield bonds and equities attractive investments in an environment still controlled by central banks. Metal recycling is seen as an important long-term opportunity in line with the climate transition.

Private investors expect to achieve significantly higher returns compared to professional investors. The ‘expectation gap’ worldwide is currently 174 percent in the long term. This is 53 percentage points more than in 2020.

This was shown in research by Natixis Investment Managers among 8,550 individual investors. A large proportion of the investors surveyed, all with more than USD 100,000 in investable assets, achieved double-digit returns in 2020. The majority of them are also very positive about 2021.

At the 14th Investment Forum of Luxembourg-based life insurance specialist OneLife, global equity funds were the most popular. Bond funds seem to have fallen out of favour.

The forum was held over two days for a (limited) live audience while absentees could follow the event at home via streaming. This edition brought together quite a few fund managers who mainly exchanged investment ideas and insights. And equities received a lot of attention anyway.

What about the economy?

At launch in 2017, the Responsible Horizon Euro Corporate Bond Fund was one of the first bond funds with a focus on sustainability. The fund has since achieved solid outperformance, but this is not due to the sustainability filters the fund applies, according to fund manager Lutz Engberding of Insight Investment, a boutique of BNY Mellon Investment Management.

“Spac share prices slump as enthusiasm wanes”, announced the Financial Times on 2 May. On 4 May: “A reckoning for Spacs: will regulators deflate the boom?” Contrast such headlines with the title of a recent event held in Luxembourg “SPAC CRAZE: Why sponsors and targets have become crazy about Luxembourg”.

If Europe’s nations decide to enforce different local guidelines when it comes to the Sustainable Finance Disclosure Regulation (SFDR) it would be detrimental not just to asset managers but also investors, industry insiders have warned.

The SFDR came into effect on 10 March, when asset managers in the European Union had to decide whether their funds fit into one of three categories set out by the regulation, designating the level of sustainable characteristics. But that was only the beginning.

“Focus on quality. Anticipate four structural trends that will dominate our lives in the years to come. Hyper-growth stocks are not recommended at this time because of the sharp rise in valuations. And be cautious about equity and bond markets.”

This is the message from Jan Viebig, Chief Investment Officer of Oddo BHF AG, who said that he is pleased that the four multi-asset funds in the Polaris range are now available on the Belgian market. 

Can you imagine it? The chip industry that will suffer the same fate as the steel industry, namely chronic overcapacity. That’s what GaveKal, one of the most prestigious research firms in the investment world, has written in its analysis ‘The Future of Chips is overcapacity’.