Absolute Return

2022 was a very challenging year for traditional asset allocations, with the active repricing of risk premiums taking centre stage.

In 2022, the markets repriced risk premiums in financial assets, quickly adjusting to the inflation risk and to the interest rate hikes implemented by central banks that followed.

Although the economy continues to decelerate, equities staged a strong rebound during the month of October.

If the smile measures how the portfolio value reacts to changes in the underlying markets, then maybe we should measure the smiles – and this is what our investment team has been doing.

September was another very challenging month for investors. The market is subject to considerable uncertainty, with no clear evidence of the next step.

After a two-month period of improving risk appetite, the market started to head downwards in mid-August, influenced by the outcome of the Jackson Hole meeting. Jerome Powell’s hawkish tone obviously had a strong impact on the markets, but it was not the only strong driver. The deterioration of energy supply in Europe as we are quickly approaching winter is a cause for concern for industrial output, but also consumers, who will be facing record energy bills.

As the investment community was slowly preparing for a well-deserved summer break, a higher-than-expected US CPI read revived fears that a recession might be around the corner. Uncontrolled inflation is pushing central bankers to continue raising the cost of capital, as the Fed did at its June meeting.

As governments continue to maintain low interest rates through the COVID-19 pandemic, and the correlation between asset classes remains high, the questions of diversification, income and attractive returns are firmly on investors’ agenda. You can now listen to the replay of our recent webinar which looked at the relevance of the multi asset absolute return approach in today’s investment markets and introduced our two risk-rated portfolios that meet your requirements.

Markets remain nervous, as investors perceive the Fed as being behind the curve in taking control over inflation. Rising prices are biting into consumer sentiment and savings, leading to decreasing growth expectations.

There are currently so many headwinds to the economy that it is difficult to isolate THE driver that is having the biggest impact on deteriorating economic fundamentals in only a small paragraph.

The global economic outlook is foggy, and the start of the year has kept on adding additional layers of complexity.

There is a lot of dust in the air for the moment

January was a challenging month for investors.

The markets navigated a bumpy road to the end of the year

Omicron is coming to town. 

“Every breath you take, and every move you make, every bond you break, every step you take, I’ll be watching you.” Obviously, The Police were not referring to monetary policies, but it sure is a nice musical framing of October’s market situation and development.

There was no lack of market events during September to cool off investors’ enthusiasm for being long risk

The world economy has significantly recovered since the lows of 2020 and, in most developed markets, it is close to pre-pandemic levels.

July saw a continuation of last month’s market trends. Long-term US Treasury yields continued to drop, with investors adapting their positioning to a slightly more hawkish stance from the Fed, and growth stocks continuing to outperform as investors feared peak growth might be behind us.

The outcome of the FOMC meeting was June’s main macro event

As the percentage of vaccinated people keeps increasing, we are getting closer to a return to our normal previous lives, or something close to it

The overall picture for riskier assets in the market remained positive in April, as the world economy continued to recover and major central banks maintained their dovish tone.

Below their relatively calm surface, the equity markets remained rather turbulent, driven by investors rotating out of defensives and into cyclical sectors. The US remains path for a firm economic recovery.

As the world economy continues to recover; since the vaccine announcement in early November, investors are positioning themselves for a re-opening of the economy and progressively rotating out of Work From Home-related investment themes

January was a very eventful month. The first half of the month saw a continuation of December’s move, with investors buying US small and medium-cap stocks and continuing to increase their allocations into cyclical assets.