Imagine a fairy that grants you three wishes. What would you wish for? The answer would be very easy for me. I would just like to know if the economy is caught up in a recession of has embarked on an expansionary phase a year from now. And whether the central bank will be pursuing an expansive or restrictive policy. If I got these two wishes granted, I would even forego the third one. Or, as a good fund manager, I might engage in risk management and save up for bad times. Growth and monetary policy are of significant relevance to the return of almost all asset classes.
The rate of inflation has been quite substantial most recently, in comparison with the recent past and surprisingly so for many market participants. The harmonised consumer price index for the Eurozone was 2% higher on a year-on-year basis in February, which was also the highest value since 2013.
In our annual press conference I have presented the most relevant topics for the investment year 2017. The most relevant ones are: stronger expected global growth, an increase in inflation and elevated event risks due to political reasons.
Erste Asset Management (EAM) has excluded companies that derive more than 30% of sales from coal mining from its mutual funds. In doing so, EAM is one of the first asset managers to have taken this step. “This was the next logical step for us, having excluded coal mining from our sustainable funds at the beginning of the year,” as Heinz Bednar, CEO of Erste Asset Management, explains.
Erste Asset Management discloses the CO2 footprint of its equity funds for the first time. The CO2-intensity of all EAM equity mutual funds is at 70.6% as compared to the MSCI world index. Our three responsible equity flagship funds are even below 50% of the referential value.
A young father is always pressed for time. What he needs is in particular is a good strategy. One of my strategies in selecting reading material is to just wait. Time will tell what is interesting and what is not. Which is why last week I read a book that had come out in 2011: Exorbitant Privilege: The Rise and Fall of the Dollar, by Barry Eichengreen, ( an acclaimed) professor of economic history.
Dr. Strangelove is one of my favourite films. Pure genius, all the way through! In one of the bizarre scenes that illustrate the madness of the nuclear threat, the manic Brigadier General Jack D. Ripper (nomen est omen) explains to Captain mandrake, played by Peter Sellers, why he has just triggered a nuclear war and thus the end of the world: the Soviet Union are trying to destroy the West by contaminating the water.
Volkswagen: the largest German car manufacturer. The Porsches: the wealthiest family of Austria. Ferdinand Porsche, the engineering genius who would build the cars that ultimately dominated the German autobahn after Hitler’s war. VW is a part of (industrial) history.
But recently, Volkswagen has also written a different sort of history: do you remember José Ignacio López de Arriortúa, who was accused of having misappropriated trade secrets when he left his post as Head of Purchasing with VW and took a position with GM, and who was also the eponym of the López effect? Do you remember the sex scandal where prostitutes had been paid for and flown in from Brazil by the company specifically to “convince” the shop stewards committee of the proposals put forth by management? Do you remember the takeover battle between Porsche and VW and the rollercoaster ride it caused on the stock exchange? Do you remember the headlines about the fight for power between the Supervisory Board president Piech and the CEO Winterkorn. A multi-billion euro company with hundreds of thousands of employees had been temporarily reduced to the pawn of two alpha males.
Gerold Permoser, Chief Sustainable Investment Officer at Erste Asset Management, finds a perfectly clear answer to this: When investors communicate with companies (both investable and not), this dialogue will lead to improvements. The publicity that might follow does not harm, either.
It is one of the best-known stories from the Bible: Man wants to see eye to eye with God and starts building a tower towards heaven; and God punishes man’s hubris with Babylonian confusion. Bereft of a common language, mankind fails to finish the tower.