Burkhard Varnholt: "Be a Knowledgeable Optimist"
Deputy Chief Investment Officer Burkhard Varnholt talks about lessons learned from financial markets in 2017 and discusses the investment perspectives for 2018.
So far, the new year feels as positive as the last one turned out to be: global growth remains solid, inflation pressures remain contained, and equity markets remain buoyant. The most recent economic data has surprised to the upside and suggests that the current cyclical trend may well stay with us for some time.
Positive on Equities, Neutral on Alternative Investments
The continued market optimism and the positive macro backdrop featured prominently in our most recent Investment Committee meeting. We retain our overall asset class views – positive on equities and neutral on fixed income and alternative investments – but did make some changes. In fixed income, for instance, we added exposure to inflation-linked securities to take advantage of portfolio diversification opportunities. Indeed, we believe that now is a good time to add them to portfolios given the recent uptick in inflation expectations, which we are keeping an eye on.
We continue to see opportunities in investment grade credit, emerging market local bonds and convertible bonds. Our preferred equity markets remain the Eurozone and Japan as they should benefit from the upswing. Yet we neutralized our formerly positive view on Switzerland and Australia. Sector-wise, we continue to favor energy, healthcare, telecoms and industrials. Further, we are still positive on real estate.
Watch Deputy Chief Investment Officer Burkhard Varnholt on investing perspectives in 2018: