Asset Managers

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’.

As a result of the Covid pandemic, trends and themes that previously seemed to be the preserve of millennials have now found their way into older generations. Even if we are gradually getting back to normal life, it is a movement that will not be easily reversed.

US corporate bonds have performed exceptionally well over the past year, but rising inflationary pressures are rapidly increasing the downside risks. The Capital Group High Income Opportunities Fund is therefore underweight on US corporate paper and sees more opportunities in emerging markets.

JP Morgan Asset Management looks at a globally diversified portfolio from different angles in order to achieve a better allocation. Global investing is a must. The source of equity returns is becoming less beta-driven. Active investing is now more appropriate, and themes can provide the necessary alpha. And the digital revolution continues unabated. 

“A better distribution within the traditional investment portfolio is 78 percent shares and 22 percent bonds,” DWS’s head of multi-asset Bjorn Jesch said. “Possibly with the addition of alternatives, to reduce the portfolio risk.”