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MoneyController

11.12.2023

Deflation and a negative outlook: China's growth weaknesses

China's growth is now facing some economic and financial difficulties, as evidenced by the fall in demand, which has led to higher than expected deflation. Deflation in China While central banks in Europe and the US are busy fighting inflation, China's economic data is showing even more deflation than expected: deflation of -0.5% was recorded in November. Food, manufacturing and energy prices were the main contributors. Chinese consumers and deflation The downward trend in prices can be explained by the slowdown in growth, but there is a risk of a circular effect: in the hope that prices will continue to fall, Chinese consumers - as Rai News points out - could postpone purchases and consumption, which would reduce demand and complicate production and inventory management. Moody's: credit outlook downgraded from stable to negative Meanwhile, Moody's has downgraded the credit outlook from stable to negative. This is mainly due to the fact that China is about to emba ...

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WisdomTree

07.12.2023

Could AT1 CoCos offer the winning combination of an attractive risk-reward profile and portfolio diversification?

In this blog, we explore how Additional Tier 1 Contingent Convertibles i.e., AT1 CoCos, could provide enhanced returns per unit of risk while providing diversification benefits, making them a potential candidate for core portfolio allocation.

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MoneyController

07.12.2023

The time for multi-asset portfolios is back

After a difficult period, multi-asset portfolios now appear to be in a favourable position. A portfolio manager writes about this in the magazine Das Investment. The multi-asset strategy and the mixed portfolio of stocks and bonds Multi-asset portfolios are the result of an investment diversification strategy that typically combines an equity and a bond component within a portfolio. As GAP portfolio manager Georgios Passameras explains, equities are the most yield-oriented investment in the long term, but also the riskiest due to market fluctuations. Bonds, on the other hand, are the most defensive investment: they are not risk-free (e.g. capital loss and credit risk), but they provide portfolios with a fixed income and a guarantee of repayment at maturity. Low interest rates and the defensive role of bonds ineffective Passameras points out that the multi-asset portfolio has had to face some difficult periods. During the long period of low interest rates, investors have to some ext ...

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MoneyController

07.12.2023

ETFs: Market trends in Europe

In the third quarter of this year, ETF inflows in Europe showed some trends worth looking at. Maturity ETFs and actively managed ETFs What trends are driving the European ETF market? Morninstar has identified some of these trends and reports on them in an article by Sara Silano. Among the new developments tracked by Morningstar is the arrival of maturity bond ETFs in Europe, first distributed by iShares and then by DWS. Also entering the European market is Ark Invest, Cathie Wood's company, which has acquired Rize and will offer actively managed ETFs to investors. Moving from banking to energy Another interesting aspect noted by Morningstar is the increase in inflows into equity ETFs (€ 19 billion in Q3), despite their negative performance against a benchmark equity index such as the Morningstar Global TME. Morningstar also notes a new thematic trend that is gradually leading investors to move out of banking stocks and into larger holdings of energy-related funds. Concern ...

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WisdomTree

06.12.2023

Two years of PCOM: outperforming peers through innovation

Why broad commodities? Insights from our recent survey1 revealed that 29% of investors don't allocate to commodities. Broad commodities have historically displayed equity-like returns, constituting an effective inflation and geopolitical hedge with low correlation to other asset classes.

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MoneyController

06.12.2023

Equities and money market funds at highs, only an apparent contradiction

With equity markets and money market funds at historic highs, why are investors betting on such different markets? An apparent contradiction Vittoria Puledda writes in 'Affari&Finanza' ('La Repubblica') that the growth of stock markets and that of money market funds, both of which have reached record levels, are only apparently contradictory phenomena. The contradiction stems from the fact that these are two very different markets, especially in terms of risk/return: investments in equities offer higher average returns but are riskier; money market funds are safer but offer lower returns. The strategy of investment diversification What attracts investors to these two different markets is the growth of the stock market on the one hand and the increasing returns of money market funds on the other. From this point of view, Puledda explains that investors' behaviour is less contradictory: they are taking advantage of both the trend growth recorded by the markets ...

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MoneyController

06.12.2023

How to invest if recession becomes probable again?

Not all asset managers believe that the risk of recession has disappeared: what is the situation in their portfolios? The risk of recession has not disappeared In 2024, the risk of a recession in the US and Europe remains real. As we read in "Focus Risparmio", Vontobel's Head of Hybrid Portfolio Management, Gianluca Ungari, outlines the possible scenario of an economy in a mild recession, not least because the economic consequences of restrictive monetary policies are usually not felt immediately. One factor that will play an important role in pushing economies into a mild recession is the restrictive monetary policies of central banks. At the same time, Ungari expects inflation to fall to the monetary policy target of 2% by the end of 2024. Recession will be mild Limiting the recessionary impact of rate hikes (Ungari speaks of a "soft phenomenon", i.e. an economic impact of monetary policy that is not too traumatic) will be the contribution of consumers, es ...

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WisdomTree

04.12.2023

Diversity of exposure: the key to building an artificial intelligence strategy

In November 2022, did you know ChatGPT was about to launch? Did you know it was going to become the fastest application ever to reach 100 million users? Not many people—including the OpenAI team that built it—predicted this outcome. It’s a great example of exciting breakthrough technologies that can influence thematic equity strategies.

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MoneyController

04.12.2023

The risk and return advantages of intermediate-grade bonds

A manager of an asset management company talks about his investment strategy, which looks with interest at the intermediate bond segment (rated between B and triple B). High yield bonds The bullish interest rate cycle has led the bond segment to achieve coupon yields that we have not seen for a long time. According to an article on "Investrends.ch", Laurent Gorgemans, Global Head of Investment Management at Nordea Asset Management, points out that in Europe, for example, the high-yield bond segment has achieved yields of between 7 and 8%. Default risk and economic fundamentals However, Gorgemans stresses that while high-yield yields almost always come with a higher credit risk than other bond types, this makes them even riskier today given the current economic uncertainty. Nordea's Global Head of Investment Management therefore believes that the issue of issuer credit fundamentals is becoming increasingly important, although he does not expect a wave of defaults as co ...