Insights

Freedom Fighters vs Central Banks?

Cryptocurrencies are hot! Upon closer inspection, they are a bad idea coupled with a brilliant technology. The technology will be broadly applied and even accepted by central banks. Existing cryptocurrencies

Cry wolf

Inflation is getting a lot of airtime these days. Bond yields are increasing rapidly, and much ink is spilled on guessing whether inflation or a rapid return to growth is

Diversification works - most of the time

Early last week we recommended investors to reduce equity holdings. Many investors have a tendency to focus only on one set of data when making allocation decisions. We look at

2020: A year almost like any other

From the point of view of the financial markets, 2020 was a good year. The sector praised itself for its ability to “see through” to the moment where the CoviD-19

Is your fund administration compliant with new investment oversight? Are you sure?

The financial authority have placed still more responsibility on the Luxembourgish fund investment industry. This time in something which requires investment expertise - something Luxembourg no longer have in droves. The

Habemus Brexit

"Brexit is finally a reality. A fatally flawed referendum was followed by a disastrous political process that no responsible UK politician can be proud of. UK obtained the thinnest of

Economic aid, vaccinations and then?

A new stimulus round has finally taken form in EU and US. The coronavirus vaccine inoculation has started. The UK Brexit (or)deal is done. The primary financial assets, stocks and

Herd immunity and economic growth

Financial markets should probably take the new strain of the Sars-CoV-2 rather seriously. Its higher infectiousness increases required level of herd immunity by quite a bit. More people will have

The shrinking USD?

Opportunities in forex markets are rare as markets are generally highly efficient. We view odds are increasing for a USD weakening potentially of some 20% eventually taking EUR/USD towards 1.45.

More good news

The good news keeps arriving regarding the CoViD-19 vaccine together with a continued increase in the infections worldwide. We can now be reasonably certain that the pandemics will be brought

A vaccine against the depression

The joint statement from Pfizer and BioNtech of successful phase three trials of vaccine against CoVid-1 has the potential to be the next game changing event in the SARS 2

Benchmarks? Do we need them?

New benchmark recommendations from ESMA aim to correct the way funds are using benchmarks. Since the introduction of the Benchmark Directive in 2018, many funds have effectively removed relevant benchmarks

A correction or just volatility?

The Covid pandemic (a once in a century event, one hopes) again accelerates briskly across Europe. The US Federal Reserve Bank has revised its policy objective (a once in three

Risk allocation is neutral

Active Risk Allocation (ARA) update: The recommended risk allocation has stabilised around neutral after a short period of advising slightly below average risk exposure. Seen from a top-down view allocation is

A sector rotation is building

Active Risk Allocation (ARA) update: Asset allocation has for decades been known to be the most important single factor for investment return. Our Active Risk Allocation aims to get the balance

Trimming portfolio risk

Active Risk Allocation (ARA) update: The recommended portfolio risk allocation is slowly falling below neutral after an extended period of elevated risk exposure.  Several factors are changing yet again and none

Time to prepare for trouble

A bungled response in the USA to the pandemic now threatens to derail the global economic recovery. The US economy will likely shrink by 3-4% in 2020-22. A Federal Reserve

The return of market risk

On 25 May 2020 we wrote that something was afoot in the financial markets. We observed that both bond markets and stock markets were gaining on a global scale. It

A narrow margin of error

We are getting worried. Not about the progress of the Covid-19 pandemic, but about specific areas of the financial markets. We have a sneaking feeling that the markets are heading

A coronavirus exit strategy

Data now indicate that very few people under the age of 60 get symptoms when they are infected with the disease and even fewer die from it. Infections and deaths

“Nobody saw it coming”

Once the Coronavirus has been successfully brought under control, the financial markets will begin to discuss who to blame for the abysmal investment results. Only when the tide goes out do

Light at the end of the tunnel

The growth rate of the COVID-19 virus is falling worldwide, and a few countries are now taking steps towards relaxing the lockdown initiatives. We expect that several countries will announce

The safety net is in place!

Active Risk Allocation (ARA) update: With yesterday´s news that the Japan State Pension Fund GPIF is ready to take a 31% holding in foreign government bonds, one of the final bits

The cost of a bail-out

Could the global economies bear to simply make the private sector whole? Compensate the private sector for the brutal drop in economic activity that looks increasingly likely? Under a set

Credit crunch vs financial crisis

The majority of newspapers and analysts are looking for a financial crisis. In our view we are in a credit crunch, potentially heading straight for a credit crisis. A financial

A concerted effort

This week’s most important investment decision is to start shorten duration of government bond portfolios. We also recognise that a shift towards a risk-on episode is in the offing as

Margin call

Through more than a month we have recommended zero allocation to risk assets and only to invest in recession assets. We have been adamant in our dire warnings about the

The economy is shifting into a new lower gear

We reiterate our view that the financial market sell-off in risk assets is likely to deepen and we repeat our recommendation to reduce exposure to stock markets and high-yield bonds.

Coronavirus - the sequel

Uncertainties dominate, and the stock market sell-off will continue. Sell equities and high yield bonds and Buy US long bonds. We reiterate our view that the financial market sell-off in risk

Putin's great week

While everybody is looking the other way, Putin reasserts Russia’s influence Last week was great one for Russian president Vladimir Putin. He torpedoed the co-operation with Saudi Arabia, an axis which

Coronavirus and all that

Uncertainties dominate, and the stock market sell-off will continue. Sell equities and high yield bonds. Be careful to separate known facts from hopes and guesswork. When trying to get our heads

US treasury bonds rally

Active Risk Allocation (ARA) update: Our primary indicator has pointed towards that investors should reduce risk assets since around Christmas. The same indicator is now falling fast through neutral driven by

Value investing - for and against

In finance there are many investment styles. The ones best known are from quantitative studies by Fama & French in the 90'ies. They initially focused on the factors: Capital size

The problem with KIIDs?

Much like the piece of paper you find in any pack of medicine, the KIID documents were meant to be something that the investors could read before investing in order

General issues on MiFID2 in Luxembourg

Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments as amended by the Directive 2016/1034/EU of the European Parliament and

Swing pricing – fair prices for all

Swing pricing is a mechanism protecting the interests of long-term investors in fund vehicles against the trading activities of short-term investors. To counter the dilution effect on the fund’s assets of

More chicken games

Apparently we are in for a new round of Chicken. The Greek government during the weekend presented its wish list (or demands, if you like) to the rest of the

Regulatory compliance

We have witnessed a strong increase in the regulation of the financial sector in general and especially in asset management and private banking. So much so that companies have gone

Establishing an investment fund

Luxembourg has truly positioned itself as Europe’s premier location for fund domiciliation. Some 30,000 fund structures are domiciled in the Grand-Duchy. It is characterised by a no-nonsense regulator, a wide

Portfolio manager and fund selection

We have witnessed a strong increase in the regulation of the financial sector in general and especially in asset management and private banking. So much so that companies have gone

Investment process analysis

Are you unhappy about the investment return offered to the clients? Are the clients unhappy about their return? Is the reason for the underperformance clear to everybody in your organisation,

Asset allocation

In the current situation with rapidly intensifying competition and a significant pressure on margins, many asset managers resort to concentrating on one particular asset class, leaving it to investors themselves

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