Investment Officer Belgium

Bhavneet Ahluwalia, investment specialist at M&G, says value investing in Europe is reasserting itself in a changing global landscape.

Last week, the French government survived two motions of no confidence, mainly by promising not to raise the retirement age from 62 to 64 for the time being. For S&P, however, this was reason enough to downgrade France’s credit rating from AA- to A+. It may seem like a minor detail, but for managers of fixed income funds that require at least AA-rated investments, it created an immediate problem. Did all those French government bonds suddenly need to be dumped?

Disrupted supply chains, volatile market conditions, and lagging investments have made investing in the water theme challenging. In recent years, European investors have withdrawn billions from water funds.

As active ETFs grow beyond niche status, some of the last traditionally active managers, including Columbia Threadneedle and M&G, are entering the European market with strategies that blend research conviction and daily oversight.

Since President Trump began his second term, the US government has increasingly taken stakes in companies considered strategically important for national security. Investors are worried about what this means for market efficiency, but in the short term they are profiting from rising stock prices.

“Automation must not strip the soul out of asset management: artificial intelligence should support compliance, not replace human expertise,” said Luke Varley, general counsel at Park Square Capital LLP, during last week’s Alfi conference Synergies for Asset Management in London.

Legislation proposed by Luxembourg in October to enhance the regulatory framework for alternative investment funds and UCITS aims to provide greater flexibility and clarity. The Netherlands, meanwhile, is working on the implementation of AIFMD II.

Triodos Investment Management is betting that nature-based solutions, still a niche segment, will mature into a full-fledged asset class within the next decade.

Driven by steadily declining yields and increasingly strict capital requirements, Dutch, Belgian, French, and German insurers have in recent years largely divested from government bonds. The freed-up capital has mainly been invested in corporate bonds and private debt.