Investment Officer Luxembourg

I was brought up in an investment era where bond investors proudly positioned themselves as “smart money” investors, in contrast to the “dumb money” crowd that invested in equity markets. But it’s becoming increasingly clear that these bond aficionados may need to relinquish their self-awarded title.

Luxembourg and London reaffirmed their complementary roles in asset management and green finance, with leaders stressing the importance of collaboration on sustainability, digital transformation, and post-Brexit resilience.

Local currency bonds have lagged this year, but expected interest rate cuts by the Fed have investors in emerging markets hoping for better times.

Asset managers like Amundi and Schroders are increasingly positioning themselves in longer-dated European government bonds, betting on faster-than-expected rate cuts. Meanwhile, U.S. asset managers are taking a more cautious approach to European duration exposure, highlighting the divergence in market sentiment across the Atlantic.

While one active ETF after another enters the market, various Dutch banks have yet to add these to their offerings, and pension funds are still adopting a wait-and-see approach. The added value compared to other passive strategies has yet to be proven, particularly in the form of a track record.

This week’s overview of transfers and appointments in the fund and asset management community in and outside Luxembourg includes updates from State Street, Clearwater Analytics, Axa Investment Managers, Blackrock and S&P Global.

With the hype around artificial intelligence and despite its high-profile failures and misuses, it’s clear the global financial sector has plenty of interest in AI, especially in hopes of finding yet another way to outsource low-complexity work. Many large financial firms have set up special departments to explore and lead the introduction of the technology in its various product offerings.

The diversification advantage of bonds has been restored this year, as inflation has fallen and positive real interest rates have emerged. This is a relief, according to Flavio Carpenzano, Director of Investments at Capital Group, who still describes 2022 as a “worst-case scenario.”

Last weekend marked the second anniversary of the current bull market in equities. Since hitting its low point on October 12, 2022, the MSCI All Countries World Index has surged about 50 percent, the S&P 500 has risen by around 75 percent, and the Nasdaq has doubled. The driving force behind this impressive rally? The so-called “Magnificent Seven” stocks, which have nearly tripled in value over the same period.