The ever-changing landscape of the funds industry
On February 4th, 2016, two hundred funds professionals gathered at the European Conference Center Luxembourg for Warren's first event of the year:FundsEvent. For the 7th edition, the topic "Investments in 2030: what does the future hold" was addressed by the passionate international and local speakers who shared their knowledge and expertise with the audience. Technology, geopolitical risks and thematic investments were at the heart of the discussion.
The event was officially opened by Edouard Bokuetenge, Chairman of the Board of the Fund Platform Group. He started with a quote by American writer Ernest Hemingway, "We have to get used to the idea that at the most important crossroads in our life there are no signs", highlighting the fact that finance, funds and more generally the world we live in has undergone significant changes. Theodore Roosevelt invented the concept of socially responsible investments, which created a new world order. The concept has since then evolved and deals with ethical, environmental, technological issues. “As leaders in the funds industry, it is our duty to innovate” added Mr. Bokuetenge, who later concluded by saying that “even if the funds industry has turned away from basics, the regulators are turning to the past”.
Where will the growth momentum be located in 2016?
The second speaker of the day was none other than Philippe Waechter, Chief Economist, Natixis AM (photo). He reviewed the different economic and political risks for 2016, stating that this year is the first since World War II “with no driver”, since neither the United States nor China will play the role of economic leaders. According to Mr. Waechter, “there is no growth momentum”. In the US, which is at the peak of its business cycle, companies have cut their investments and the economy is slowing down. On the other hand, China is turning from an industry driven economy to a service driven economy: many adjustments need to be made and companies will disappear in the years to come. Therefore, the challenge, for European countries, will be to create their own growth. In this respect, the economic policy will stay very accommodative, but the fiscal policy will need to be revised. Political issues will impact the global economy and the refugee problem will need a collective answer. On the other side of the Atlantic, the American election will also create uncertainty.
“Bond is not dead”
The next panel session addressed the topic of thematic investments and was moderated by Sasho Bogoevski, Managing Director, Multi Asset Solutions, AB. As we are about to celebrate the Chinese new year, the moderator highlighted the fact that we are entering the year of the Red Monkey, which is a year of “Competition and Challenge”. Charles Nollet, CIO of Indosuez Wealth Management (formerly known as Credit Agricole Private Banking) put the emphasis on two identifying themes: aging and innovation. He also insisted on the fact that we need to be modest, as we cannot predict what the future will hold: “We need to create a portfolio which will allow us to survive”. According to Sebastien Cordoliani, Asset Manager, EWUB, investment teams need to include specialists, notably engineers, who can actually look at innovation and all the major issues of a changing world. In other words, he thinks that “we need to reinvent the way we work”, along with identifying themes, picking winners and doing it at the right time. In this respect, Mr. Cordoliani added: “innovation is the key: transportation, scarcity of resources, etc”. The third participant, Lionel Balle, Head of Fixed Income, Kredietrust Luxembourg, started his speech with the following “bond is not dead, but it surely needs a new investment philosophy”. He is also keen on relying on alternative asset classes: real estate, hedge funds and private equity. Lionel Balle therefore suggested trusting companies that explore investments outside of Europe and the US.