On 3 April, we held our monthly Investment Committee meeting. Only three weeks after the previous one – three weeks that were tightly packed with issues, as we can see in the performance data of the most important asset classes. Equities and high-yield bonds have lost value, whereas Eurozone government bonds and emerging markets bonds have recorded gains. An upside-down scenario, compared to previous months.
On 14 March our Investment Committee met, and as always, we started out on a discussion of our risk stance, i.e. our risk assessment. From my point of view, four findings of the discussion are worth bringing up here:
„If you’re going through hell, keep going!”
Sir Winston Spencer Churchill
The year 2018 had started on such a promising note – is what we all were thinking. But at the beginning of February, the market taught us a lesson. As a result, the discussions at our first Investment Committee of the year at the beginning of February were interesting ones.
There are many factors that may affect inflation. Also, the weights of certain factors may vary across countries. Take the development of the exchange rate, for example.
Why is the inlfation outlook for 2018 important? In our three part series we explain how inflation works.
Earlier this week, we convened the last Investment Committee of 2017. The general risk appetite of the team has not changed vis-à-vis the previous month (from 78.85 percent to 79 percent on our 0 – 100 percent scale). The team continues to see the future optimistically, with a resulting “risk on” stance.
2017 is drawing to an end, and the bottom line is positive. The outcome is significantly better than we had expected. Since the financial crisis in 2008, the global economy has never expanded more quickly and especially concertedly than in 2017. Also, inflation has surprised on the downside, falling short yet again of the expectations held by central banks and analysts.
This week we held our monthly Investment Committee meeting. Although only little has changed with regard to the overall economic picture, we were having a few interesting discussions that we would now like to share with you.
Once a month the Investment Committee of Erste Asset Management convenes in order to discuss the medium-term market outlook. We are going to start a new blog, where we will report on what drives our investment professionals and what risks they see.
I have recently read an interesting research report by one of our independent research partners, Gavekal Research. Gavekal Research is based in Hong Kong, and one of its strengths is its deep knowledge of the Asian market. The piece titled “Good Governance, Poor Performance” discusses good corporate governance. This is a central pillar of traditional as well as sustainable investment.