No surprise, but a new normal
The first round of the French elections can be read in two ways. First, there was no surprise. Indeed, the two winners have led the polls since January. A closer look at the details, however, shows something more profound.
As we approach the first round of the French presidential elections on 23rd April, the uncertainty over who will make it into round two, and the final result, has never been greater.
While a moderate candidate is the most likely victor in our assessment, the situation remains fluid with little risk priced in. In such an environment, we believe it is important to protect investors in our multi asset portfolios from market shocks. We have tactically reduced exposure to financial markets and increased exposure to the Japanese yen for its defensive qualities in times of stress.
With the surge in market optimism in the second half of 2016 and continuing into the first months of this year, some investors might be tempted to raise their risk budgets and increase their portfolio exposure to market beta. However, we urge investors to maintain a robust risk-managed investment approach to equity investing, to help navigate the potentially choppy waters ahead. We believe there could be a number of headwinds this year. This paper highlights some of these potential risks, in particular, political, valuation and inflation risk, as well as the state of the Chinese economy. We illustrate how Unigestion’s risk-managed approach has positioned investors’ portfolios to reduce the impact of these risks and safeguard against market drawdowns in 2017, including the pullback seen in March.
By Alexandre Marquis, Head of Investment Specialists and Maria Musiela, Investment Specialist, Equities
This note is a brief guide to the construction of the set of “nowcaster” indicators used at Unigestion. It reviews the value of using nowcasters for asset management purposes, the methodological choices that have been made to create Unigestion’s nowcasters and, finally, provides measures to quantify their accuracy.
Written by Florian Ielpo, Head of Macroeconomic Research, Cross Asset Solutions
Alternative risk premia investing has grown rapidly in popularity in recent years. But what exactly does it involve, and what should investors look for when considering which alternative risk premia strategies to invest in?
In this paper we look at the theory behind alternative risk premia before discussing some of the practical considerations that should help investors get the most out of their allocation to these innovative investment strategies.
Written by Olivier Blin, Joan Lee, Jérôme Teiletche