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The Importance of Investing Strategically

Credit Suisse has adjusted its strategic asset allocation. Equities now have more weight, as do bonds from emerging markets. In contrast, bonds from core countries were reduced. CIO Michael Strobaek explains why.

Why is it so important for investors to follow an investment strategy?

Michael Strobaek: The investment strategy is the key driver for absolute return on investment. Strategic Asset Allocation (SAA) defines the neutral, long-term weighting of asset classes and subclasses of a portfolio. It accounts for about 80 percent of portfolio return.

How is SAA defined at Credit Suisse?

In order to meet different client expectations and requirements, Credit Suisse offers five investment profiles. They mainly differ with regard to expected return and risk. For each profile, we define a specific SAA. We regularly review this allocation and adjust it as necessary. We recently made the latest adjustment.

Why have you adjusted the SAA?

The economic environment and the financial outlook are constantly changing – and the pace of change has increased in recent years. The environment is currently characterized by a high degree of economic uncertainty and, in particular, extreme monetary policy intervention. This has a substantial impact on the return properties of the most important asset classes. We believe that this will not change significantly over the next few years.

How do investors benefit from these adjustments?

Generally, I advise investors to thoroughly review the strategic weights of the various asset classes in a portfolio and define long-term investment objectives with their advisor. Credit Suisse clients whose assets are managed by us do not need to do anything. Thanks to our systematic investment process, the changes will be made automatically.