Play market gradually: Amundi
Trying to time to bottom of the market is unrealistic and investors should gradually consider opportunities to rebalance their long-term strategic allocation, according to Amundi Investment Management.
COVID-19 had led to a massive sell-off and investors could take advantage of the potential sequence of market opportunities that would emerge from the crisis.
“We know that the financial cycle leads the real cycle. Markets will bottom before the real cycle has completed its downward trajectory, and, based on history, their recovery will be ahead of and will drive the recovery in the real sphere by three to six months,” the firm said.
The firm said the sell-off had eliminated deviations in equity returns and in credit spreads, but not at the same pace everywhere, and the sell-off had not priced a permanent loss of potential growth.
“From an investment perspective, to detect the tipping point of the crisis, investors will need to look at the corporate-bond asset class where there is a race against time between liquidity and solvency,” the firm said.
“The de-freezing of the credit curve – crucial at the short end – will be necessary for validation of a full recovery in markets.
“Bounces in equity performance have masked this, but this is the indicator to watch.”
AUTHOR
Chris Dastoor
Recommended for you
Lonsec and SQM Research have highlighted manager selection as a crucial risk for financial advisers when it comes to private market investments, particularly due to the clear performance dispersion.
Macquarie Asset Management has indicated its desire to commit the fast-growing wealth business in Australia by divesting part of its public investment business to Japanese investment bank Nomura.
Australia’s “sophisticated” financial services industry is a magnet for offshore fund managers, according to a global firm.
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
