Julius Baer CIO Monthly – a view from the top on key market trends

Chief Investment Officer, Yves Bonzon, tells Amanda Kayne why he believes that the European Central Bank has an opportunity between the French and German elections to reverse engineer negative interest rates - a policy mistake, he believes, from the onset. Expectations over a hike in deposit rates had already been building in markets until recently when the ECB made it clear it would not do so for now. A move of this kind was a missed opportunity in Yves' opinion since it would have sent a signal of confidence in the system and positively impacted the euro and European assets.

Chief Investment Officer, Yves Bonzon, tells Amanda Kayne why he believes that the European Central Bank has an opportunity between the French and German elections to reverse engineer negative interest rates - a policy mistake, he believes, from the onset. Expectations over a hike in deposit rates had already been building in markets until recently when the ECB made it clear it would not do so for now. A move of this kind was a missed opportunity in Yves' opinion since it would have sent a signal of confidence in the system and positively impacted the euro and European assets.

In dialogue with Amanda Kayne, Julius Baer's Chief Investment Office, Yves Bonzon, warns investors not to become too obsessed with the outcome of the European elections since the greater source of uncertainty comes from the European Central Bank. Once the French elections are behind us there could be a good case for the European Central Bank to start normalizing interest rates back to positive. Rate hikes in the EU are not already priced in so a move of this kind would benefit banks, the euro and cyclical value stocks.

In dialogue with Amanda Kayne, Julius Baer's Chief Investment Office, Yves Bonzon, warns investors not to become too obsessed with the outcome of the European elections since the greater source of uncertainty comes from the European Central Bank. Once the French elections are behind us there could be a good case for the European Central Bank to start normalizing interest rates back to positive. Rate hikes in the EU are not already priced in so a move of this kind would benefit banks, the euro and cyclical value stocks.

Chief Investment Officer, Yves Bonzon, tells Amanda Kayne that while the direction of the global economy is seemingly clear, investors should be wary of politics. The Julius Baer strategy is to treat political events as external shocks which means keeping some cash in reserve to be able to take advantage of any potential surprise thereafter. In the meantime, Yves explains why it is healthy to keep some exposure to hedge funds, namely systematic and long/short trend following strategies, with a clear focus on managers that do not run too large funds and have the ability to navigate markets without liquidity issues.

Chief Investment Officer, Yves Bonzon, tells Amanda Kayne that while the direction of the global economy is seemingly clear, investors should be wary of politics. The Julius Baer strategy is to treat political events as external shocks which means keeping some cash in reserve to be able to take advantage of any potential surprise thereafter. In the meantime, Yves explains why it is healthy to keep some exposure to hedge funds, namely systematic and long/short trend following strategies, with a clear focus on managers that do not run too large funds and have the ability to navigate markets without liquidity issues.

Yves Bonzon, Chief Investment Officer, in dialogue with Amanda Kayne, reminds investors that evidence shows that those investment portfolios without any restrictions tend to outperform those with restrictions.  A new year is a good time for investors to re-visit any constraints they may have in their portfolios to understand if they still make sense or not. No limits in a portfolio means it is free to diversify across all asset classes and in turn can benefit from the year ahead, both in terms of expected and unexpected events to come. Keep in mind that the bond bull market of the past three decades is most likely behind us and the US border tax initiative on the table could have unintended but bad consequences for the profitability of the S&P500.

Yves Bonzon, Chief Investment Officer, in dialogue with Amanda Kayne, reminds investors that evidence shows that those investment portfolios without any restrictions tend to outperform those with restrictions.  A new year is a good time for investors to re-visit any constraints they may have in their portfolios to understand if they still make sense or not. No limits in a portfolio means it is free to diversify across all asset classes and in turn can benefit from the year ahead, both in terms of expected and unexpected events to come. Keep in mind that the bond bull market of the past three decades is most likely behind us and the US border tax initiative on the table could have unintended but bad consequences for the profitability of the S&P500.

Chief Investment Officer, Yves Bonzon, shares with Amanda Kayne why he believes that 2016 could go down in markets' history as the year that started the early stages of an upward trend in interest rates and ended the thirty-five-year-long bull market in bonds.

Chief Investment Officer, Yves Bonzon, shares with Amanda Kayne why he believes that 2016 could go down in markets' history as the year that started the early stages of an upward trend in interest rates and ended the thirty-five-year-long bull market in bonds.