BNP Paribas Asset Management

What are the options for managing cash in the current environment of mostly negative interest rates? Philippe Renaudin, Head of the Money-Market team at BNP Paribas Asset Management, and Patrick Barbe, Head of the Euro Bond team, believe that it is still possible to generate competitive returns through active management and opportunistic investment strategies.

Is anyone surprised? By the end of the week beginning Monday 5 February, the US S&P 500 index had fallen by 10% from its record high on 26 January and market conditions remained volatile.

The Trump administration’s late 2017 tax package seeking, among other measures, tax cuts for US businesses and households, may be a feather in the cap for Republican politicians, but from an economic perspective, we believe the negatives - which include a boost to the fiscal deficit - are likely to outweigh the positives.

Sir David Attenborough’s recent BBC documentary ‘Blue Planet II’ highlighted serious ecological issues, perhaps most strikingly the plastic waste that chokes our oceans, harms wildlife, and even finds its way back into the food chain.

One of the surprises of 2017 was the relatively poor performance of stocks making up the energy sector of the MSCI World developed market equity index. The sector gained just 4.2% last year, compared to the 23.1% advance for the broader index.

While factor investing has gained in popularity among equity investors, its range of application is not limited to one asset class. Indeed, BNP Paribas Asset Management has been developing factor-based strategies in fixed income since 2009, initially on government bonds and currencies and more recently on corporate bonds.

The global upswing in economic activity has strengthened… What a difference a year makes! “The global cyclical upswing that began midway through 2016 continues to gather strength,” wrote the International Monetary Fund (IMF) in the World Economic Outlook report (published October 2017).

The Green Bond Principles (GBP) define a green bond as any type of debt instrument where the proceeds are used to finance or refinance green projects. The GBP also require that the bonds be aligned with four core components: (i) how the proceeds are used; (ii) the process used for project evaluation and selection; (iii) how the proceeds are managed; and (iv) reporting.

From a simple statistical indicator used mostly by risk management teams, volatility has become a key variable in financial markets over the last few years, scrutinised widely by investors and analysts.

The performance of equity markets has been excellent in 2017. Is it time to start talking about a return of ‘irrational exuberance’ when looking at the asset classes for 2018?