July 12, 2024

THE FOUR KEY POINTS FOR PORTFOLIOS THIS YEAR, ACCORDING TO JULIUS BAER

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  • The private banking entity, the growth of the developed world is still in good health and the economic cycle is not over yet
  • In equities, the recent correction provides interesting entry points to some of the most attractive themes
  • Julius Baer bets on passive management for a year characterized by volatility

The world economy has already left behind its higher growth rates, while inflation will foreseeably rise. In the opinion of Julius Baer, this will further erode the support provided by the big central banks. “Therefore, investors will have to adapt their positioning and adopt a more active stance,” he warns.

From Julius Baer’s point of view, and as stated in his perspectives document for this year, “the challenge for investors in equities will be to obtain capital gains, while investors in the bond markets will have difficulties in preserving their capital”.

For the private banking entity there will be four key issues to be monitored in 2019 from a global point of view:

1. Adapt the portfolio as interest rates rise. Equities in developed markets continue to drive profitability. In this sense, “the growth of the developed world is still in good health and the economic cycle is not over yet and inflation will hit and pull up yields,” he says.

2.Take advantage of the trends of future generations in the portfolio. In his opinion, the digital transformation will be fundamental: from the technological ones to the mass market. In this sense, it highlights that “digital innovation is redefining all sectors and that the recent correction offers interesting entry points to some of the most attractive topics

3.Find a store of value. The entity points out that the Swiss stock market is difficult and can be an attractive option in the face of increased political and market risks, given that it is a way to diversify. In addition, he maintains, “the Swiss stock exchange has repeatedly demonstrated that it is a store of value”.

4. Move with the financial markets. Finally, Julius Baer is convinced that 2019 “is going to be a year to invest actively.” A vision that is based on two arguments: the increase in volatility is here to stay and investors who can not or are not willing to monitor the markets should resort to active management solutions.

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