investment viewpoints

CIO view: a stark new decade

22 mai 2020

Christophe Khaw

Chief Investment Officer, 1798 Platform

Florian Lauwers

Investment Strategist 1798 Platform

The last decade was about low volatility and the triumph of passive investments.

Welcome to a very different decade.

The COVID-19 pandemic will likely act as an accelerator of trends born in the prior decade. These trends include the digitalisation of the economy, the pressure to rethink globalisation, and the shift of power to Asia, to name a few.

So far, the repercussions on the financial economy have been mitigated by extraordinary government and central bank response. Indeed, quantitative easing has swollen central bank balance sheets to unprecedented levels.

This de facto government backstop for markets has boosted confidence, and reinforced the perception that the past decade will serve as a model for the future.

We disagree, and map out a different path for the next decade.

One outcome is already clear: governments, businesses and many households will be loaded with mountains of additional debt. This has important implications for currencies and inflation. It will also play out in a context of geopolitical tensions that is likely to coincide with the rise of Asia, particularly China.

What does this mean for investments?

We see increased differentiation between industries, with technology as a clear winner. We also see pronounced financial instability and volatility. It remains early to identify the winners (or survivors) but clear trends are already emerging.

For us, greater dispersion amongst companies, industries and countries, combined with a return of volatility, are here to stay. This will mean that the trend of investing into large passive vehicles may reverse, shifting back to more nimble and active managers.

Active managers with a broader mandate and the ability to participate in inefficient markets, such as the volatility market, could be particularly attractive.

We are entering a stark new decade with an unprecedented global event, where specialised expertise can help investors tap into material opportunities and navigate uncertainty.

Click here to download the full document.

informations importantes.

For professional investor use only

This document has been issued by Lombard Odier Funds (Europe) S.A. a Luxembourg based public limited company (SA), having its registered office at 291, route d’Arlon, 1150 Luxembourg, authorised and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended; and within the meaning of the EU Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD). The purpose of the Management Company is the creation, promotion, administration, management and the marketing of Luxembourg and foreign UCITS, alternative investment funds ("AIFs") and other regulated funds, collective investment vehicles or other investment vehicles, as well as the offering of portfolio management and investment advisory services.

Lombard Odier Investment Managers (“LOIM”) is a trade name.

This document is provided for information purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This material does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of LOIM and is addressed to its recipient exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. This material contains the opinions of LOIM, as at the date of issue.

Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income.

Source of the figures: Unless otherwise stated, figures are prepared by LOIM.

Although certain information has been obtained from public sources believed to be reliable, without independent verification, we cannot guarantee its accuracy or the completeness of all information available from public sources.

Views and opinions expressed are for informational purposes only and do not constitute a recommendation by LOIM to buy, sell or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change. They should not be construed as investment advice.

No part of this material may be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorised agent of the recipient, without Lombard Odier Funds (Europe) S.A prior consent. ©2020 Lombard Odier IM. All rights reserved.