Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset allocationWe remain underweight global equities, but continued stimulus and an economic backdrop that is not catastrophic mean this is nuanced by neutral positions in some regions. We favour stocks of companies that have pricing power as well as those showing healthy dividend growth and low leverage.We are neutral US Treasuries as a way to protect portfolios, but underweight negative-yielding European and Japanese bonds. We remain cautious about ongoing yield compression, preferring to focus on quality and to limit duration. We are underweight US high yield, where leverage is high and default levels have been creeping up.The opportunity cost of holding gold, on which we remain neutral, althoughRead More »
Articles by Perspectives Pictet
Download issue:Sisyphus was punished by the gods by having to repeatedly roll a boulder up a hill after it rolled back down each time he reached the summit. Today, markets are subjecting the world’s central bankers to the same punishment. According to César Pérez Ruiz, PWM’s Head of Investments & CIO, “each time central banks attempt to normalise monetary policy, the ‘market gods’ compel them to revert to easing mode and lower rates. The result is we are living in an era of economic slowbalisation.”Today, “the global economy is flying on one engine, with manufacturing in recession and services keeping the economy airborne. Populism-driven fiscal stimulus is keeping services afloat for now and central banks are doing everything possible to support their economies. He concludes that heRead More »
This independently managed, family-owned hotel in the City of Basel attracts guests from all over the world for its luxurious accommodation, its superb restaurant with three Michelin stars, and its talented staff team offering superior serviceThe Grand Hotel Les Trois Rois, which sits on the Rhine in the historic centre of Basel, is one of the oldest city hotels in Europe. The first record of The Three Kings dates back to 1681 when it was described as an inn for gentlemen. Rebuilt in 1844 in Belle Époque style, it was redesignated as a Grand Hotel, and began to attract distinguished guests from the worlds of politics and the arts.Over the next 160 years, Les Trois Rois was run by a succession of owners, some of whom sold off parts of the building. In 1936, its owners started to appointRead More »
Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset allocationWhile dovish central banks have resulted in an impressive ‘everything rally’ this year, we now need to see an improvement in fundamentals, as 12-month forward earnings for global equities are still 2% below their highs of October 2018. We therefore remain generally cautious on equities, waiting for a correction before we increase exposure.Trading volumes have declined and market gains are narrowly concentrated. However, we continue to see opportunities in some high-quality cyclical sectors such as industrials. Selection is paramount.As more developed-market yields turn negative, we are upbeat on local-currency emerging-market debt. Deleveraging could also spell opportunities in EMRead More »
The resignation of the Mexican finance minister raises further questions over prospects for Mexican assets.Carlos Urzúa, the Mexican Finance Minister, unexpectedly quit on Tuesday. His resignation, announced in a letter in which he set out the “many” disputes he had had with the administration of president Andrés Manuel López Obrador (AMLO), is meaningful from several standpoints. A respected official, Urzúa was seen by financial markets as a moderate, whose commitment to fiscal prudence reassured investors struggling to decipher AMLO’s economic north star. His departure also reveals profound tensions within the government between those aiming for ideology-led policies – which Urzúa denounced – and those advocating orthodox economic policies.Arturo Herrera, the current Deputy FinanceRead More »
Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset allocationAlthough the US-China ‘trade truce’ and dovish central banks are giving a short-term fillip to equities, our analysis suggests that expansion of valuations from here is limited, making us globally cautious on equities. But we see opportunities in high-quality stocks in individual sectorsWe remain underweight government bonds given low yields, except US Treasuries, on which we are neutral. We have moved from an underweight to neutral stance on euro high yield in recognition of ECB support, including a possible resumption of bond buying.A resilient US economy, low inflation, limited downward pressure on the dollar and a lessening of trade tensions after the G20 summit mean we are neutralRead More »
Pictet Wealth Management’s latest positioning across asset classes and investment themesAsset allocationWe have turned tactically underweight on global equites, including US equities, given elevated valuations, mixed economic data and rising trade tensions. We remain neutral on euro area equities, where valuations are generally more reasonable than in the US. We have also moved from an overweight to neutral stance on Asian emerging-market equities.At the same time as we remain focused on quality companies rather than on speculative plays, portfolios are partially hedged against the risk of further equity market consolidation.We remain underweight government bonds given low yields, except US Treasuries, on which we are neutral. We have shifted from an underweight stance on top-ratedRead More »
Physicist Pascal Gallo co-founded a company in partnership with Lausanne’s Federal Institute of Technology to create ultra-pure lab-grown diamonds for demanding high-tech applications, longer lasting watches and high-quality jewelleryThe reason for developing the lab-grown diamonds was a search for ultra-pure stones that could enhance the power of energy transmission using lasers. Diamonds have extraordinary properties: they are the best conductors of heat which means they can create intense laser beams without overheating. Research scientist Pascal Gallo and Professor Eli Kapon of the Swiss Federal Institute of Technology (EPFL) found that using diamonds in lasers broke the world record for laser energy transmission.The two colleagues patented their discovery, and wanted to start up aRead More »
Technological innovations offer a Swiss solution to modern traffic problems in the form of a powerful e-bike capable of long-distance, high-speed urban commuting with full connectivity modelled on global brands such as TeslaSwitzerland may not feature on lists of the world’s leading carmakers, but it is home to the manufacturer of a state-of-the-art form of commuter transport. Stromer battery-powered e-bikes, made in the small village of Oberwangen near Bern, are capable of travelling distances of as much as 180 kilometres at speeds of up to 45 kilometres per hour. Last year more than 10,000 bikes were sold – almost 70 per cent outside Switzerland.The Stromer e-bike was developed by Thomas ‘Thömu’ Binggeli, a cycling enthusiast. In a farmhouse south of Bern where he started a businessRead More »
Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset AllocationThere were no changes to our asset allocation in April. While we are encouraged by better-than-expected Q1 earnings and some improvement in earnings expectations, we remain neutral on global equities as we await new catalysts to justify current valuations. At the same time, we have a positive view of Chinese and Indian equities.We remain underweight government bonds given low yields, except US Treasuries, on which we are neutral. By contrast, we remain overweight local-currency emerging-market bonds, believing that they could outperform corporate credit as recent US dollar strength wanes.In general, we recognise that central banks’ support and an improvement in economic momentum couldRead More »
Download issue:English /Français /Deutsch /Español /ItalianoWith all major central banks now having turned dovish, we can expect the continuation of ultra-low global interest rates in 2019. This is a relief for markets, which have already rallied in response. The greater concern is whether global growth can make a comeback.César Pérez Ruiz, Pictet Wealth Management’s (PWM) Head of Investments & CIO, will be looking for stabilisation in earnings revisions against the current backdrop of rich equity valuations. “For markets to continue to rally, we will need economic activity to bottom out and earnings revisions to stabilise in the second half of the year,” he writes in the April-May issue of Perspectives. “We see volatility in markets ahead until various resolutions have been reached,Read More »
Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset AllocationAlthough we expect the economic picture to brighten and the decline in earnings expectations to end, we have a prudent stance on global equities, as expressed in our decision to book some profits on global equities and to invest in put options on large-cap European and small-cap US equities.At the same time, our willingness to take on reasonable risk means that the reduction in equities was matched by an increased allocation to local-currency emerging-market (EM) debt, part of a move toward seeking ‘carry’. Our desire to build a barbell strategy within this framework means we have more recently moved from an underweight to a neutral stance on euro investment-grade credits to mitigateRead More »
IMD and Pictet join forces to sponsor the 2019 IMD Global Family Business Award.2019 Global Family Business Award – The nomination process is openPictet joined forces with IMD and is now proud to sponsor the 2019 IMD Global Family Business Award, a prestigious annual prize presented to a company that successfully combines family and business interests, tradition and innovation, while at the same time fully assuming its social responsibility.The nomination process for 2019 has been launched, you may find out more on the award and criteria here.Partnership between Pictet and IMD LausanneThe IMD Global Family Business Center is based in Lausanne and has now been operational for more than 30 years. It was the first institute to focus on family businesses, their values, the principles theyRead More »
Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset AllocationAt current valuations, we remain prudent about global equities’ further potential, waiting for further clarity on economic and corporate growth before moving from our present neutral stance.At the same time, we remain confident that the central banks will continue to support markets. In Europe, fiscal policy is expected to give a marginal boost to growth.Although central bank dovishness is helping corporate bonds, flagging growth and the risk of inflation mean we are underweight credits in general. We favour quality in this space, which is why our preference goes to investment-grade rather than high-yield paper.The ‘illiquidity premium’ offered by alternative’ assets such as directRead More »
Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset AllocationWith expectations for earnings growth continuing to be ratcheted down, the recent rebound in equities owes a lot to the decline in valuations. We therefore remain neutral on equities overall. However, we believe central banks will be inclined to support financial markets this year and help ensure modest gains for risk assets. More than ever, an agile, tactical approach will be needed to investing.While we have moved to an overweight stance on emerging-market (EM) government bonds in local currencies, we remain negative on developed-market (DM) credits given the late stage we are in the economic cycle.Our currency strategy is posited on expectations that US dollar strength will fadeRead More »
High-tech bicycle lights are making cycling safer and helping authorities to design cities that work better for two-wheeled commuters.While it is an oft-repeated truism that biking is as good for your health as for the environment, only a very small proportion of the population has embraced a two-wheel lifestyle. In the EU for example, on average just 12% of people cycle every day, while 50% go by car and 16% use public transport. Walking rates are high, but most journeys are too far to be made entirely or largely on foot.However, there have been efforts to make cycling a key part of city planning—something that can now be done more effectively thanks to new technology that provides much more accurate data on rider behaviour than before. Irene McAleese, co-founder of See.Sense, whichRead More »
Download issue:English /Français /Deutsch /Español /ItalianoAfter a difficult year for markets in 2018, with very few asset classes posting positive returns, we anticipate that 2019 will be a year when the “three amigos”— consisting of a bear, a bull and a kangaroo—stake out their territory in financial markets. In other words, we expect plenty of ups and downs—but also think that investors sufficiently smart to exploit volatility spikes will, like a kangaroo, be able to bounce ahead.In the 2019 special edition of Perspectives, César Pérez Ruiz, Pictet Wealth Management’s (PWM) Head of Investments & CIO, explains why he is not afraid of volatility. While “we can be reasonably sure that 2019 will bring the return of a more standard volatility regime, with intermittent spikes, he writes.”WeRead More »
Selectiveness will be key to navigating between 2019 tailwinds and headwinds.Overall, we think there are reasons for investors to be more optimistic on emerging market (EM) debt in 2019. A Fed pause, a limited rise in US Treasury yields, a weaker US dollar and an eventual US-China trade truce could all be tailwinds for EM debt after poor returns in 2018.Furthermore, monetary and fiscal stimulus should help put a floor on the recent Chinese growth slowdown. Along with some policy relaxation (tax cuts, reductions in banks’ reserve requirements, support for infrastructure investment, relaxation of property market restrictions), this could support Chinese credit, and lead to Chinese growth rebound in H2. Furthermore, an eventual trade truce with the US could boost business and investorRead More »
As is evident when travelling on public transport, people spend a lot of their idle time on mobile phones. But according to Stephan Schambach, the serial entrepreneur behind several major innovations in e-commerce, retailers have been slow to recognise that the future of their industry lies in mobile technology. Customers will increasingly demand the online experience available in other consumer industries such as travel and tourism, and the retail brands that are first to provide it will reap the rewards.Having created enormous value by capitalising on the major turning points in e-commerce over the last three decades, Stephan Schambach has launched a new company to take advantage of this latest inflexion point. NewStore’s aim is to create the world’s first Omnichannel-as-a- ServiceRead More »
Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset AllocationAfter a bruising 2018, we expect further volatility ahead. But the recent sell-off in equities, particularly in the US, may have been excessive with regard to still-decent fundamentals. We will continue to use spikes in volatility for tactical advantage, believing they offer opportunities.We are cautious on corporate credit overall as leverage, increasing rates and slowing growth make the climate challenging. We are neutral on US Treasuries overall, with their relatively high couponproviding some protection against the further, limited rises in US rates we expect.We continue to see alternatives as a way to boost the relatively uninspiring prospects for traditional portfolios. PrivateRead More »
The sharing economy is disrupting many consumer industries such as hotels (Airbnb) and taxis (Uber). One traditional industry that is increasingly facing disruption is office accommodation, where co-working is growing fast around the world. As with traditional offices, there are desks, meeting rooms and other working facilities, but they are usually shared by people not employed by a single organisation who enjoy working together as a community with online services providing benefits.One of the most impressive co-working operators is a Chinese company based in Shanghai, founded in 2015 by Grant Horsfield who had previously created the upmarket naked Group, which operates eco-friendly luxury resorts in China. In 2015, the South African entrepreneur decided to extend the group’s brandRead More »
Three British entrepreneurs have created the world’s first insurance-backed peer-to-peer marketplace to rent almost anything, bringing the sharing economy to cameras, projectors, disco equipment, drones, hot tubs, kayaks and a lot more.Mass consumption has become a common complaint in modern life, as consumers increasingly feel that they need to acquire the latest gadgets, update their mobile phones frequently and own cars used on average for only 4 per cent of the day. Throughout our lives, we accumulate a large quantity of possessions that are completely under-used, while people who could make use of those items cannot access them.The sharing economy grows larger every year, however, with Airbnb providing a platform for home-owners to rent their accommodation to travellers more cheaplyRead More »
Pictet Wealth Management’s latest positioning across asset classes and investment themes.
We remain neutral on global equities overall, seeing relatively limited potential for developed market stocks in particular as earnings growth declines. We favour companies with pricing power as well as measurable growth drivers and low leverage.
We have moved from underweight to neutral in US Treasuries, as the rise in yields slows. But we have shifted from a neutral to underweight position in core euro area bonds ahead of monetary policy normalisation.
We have moved to underweight from neutral in corporate bonds, as rising rates threaten to expose vulnerable parts of the credit market.
We continue to diversify
Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset AllocationWe remain neutral on global equities overall, seeing relatively limited potential for developed market stocks in particular as earnings growth declines. We favour companies with pricing power as well as measurable growth drivers and low leverage.We have moved from underweight to neutral in US Treasuries, as the rise in yields slows. But we have shifted from a neutral to underweight position in core euro area bonds ahead of monetary policy normalisation.We have moved to underweight from neutral in corporate bonds, as rising rates threaten to expose vulnerable parts of the credit market.We continue to diversify into alternative assets to compensate for falling expected returns forRead More »
Download issue:English /Français /Deutsch /Español /ItalianoAs the recent upsurge in volatility shows, the outlook for risk assets is becoming more uncertain than ever. Trade wars, doubts about economic and corporate growth prospects, big fluctuations in oil prices and the winding down of expansionary monetary policies, not to mention gathering political and geopolitical tensions, have all contributed to market wobbles since early October.How to respond, especially as, according to César Pérez Ruiz, PWM’s Head of Investments & CIO, in the December 2018 issue of Perspectives, a closer look “ reveals a widespread breakdown in conventional correlations…As a result, markets have been marked by anomalies that have made them difficult for investors to navigate”?Right at the beginning of thisRead More »
People born between 1981 and 1996 are radically changing the patterns of consumption established by their predecessors, in ways that are adversely affecting some industries and favouring companies which take advantage of the increasing spending power of younger consumers.Millennials are a group of people who were born between 1981 and 1996, which makes them between 22 and 37 years old in 2018. They are important for two reasons: there are more than 80 million millennials in the US today, making them a larger population group than the baby boomers born between 1946 and 1964 who number 76 million; and they are entering the prime spending years of their mid-thirties, when they become the largest discretionary spenders with average annual spending growth of 3–4 per cent.The impact on the USRead More »
Giant digital companies are increasingly competing in the physical world by personalising their offerings, and offering products that create a ‘better me’ or a better world. But some retailers are fighting back by creating real world experiences that cannot be rivalled online.Understanding the consumer of the future is critical to success in a fast-changing world where the old rules no longer apply. Brands need to react to the evolving needs of consumers who are prepared to change their behaviour frequently in ways unprecedented in the past. And they face competition from companies harnessing new technologies to tailor their offerings and provide more personalised offerings.The Copenhagen Institute for Futures Studies (CIFS) is an independent, not-for-profit think-tank which advisesRead More »
Following the US midterm elections, Senior US Economist Thomas Costerg and Senior Cross-Asset Strategist Jacques Henry discuss the outlook for the US economy and markets.
Pictet Wealth Management’s latest positioning across asset classes and investment themes.Asset AllocationWhile the recent sell-off might have been overdone in view of fundamentals that remain basically sound, market gyrations and our expectation of further volatility mean we remain neutral equities overall. The current environment favours active management and a tactical allocation approach, exemplified by the partial sale of equity options we acquired to protect portfolios in early October.While markets attempt to find their footing, we are keeping plenty of dry powder to exploit opportunities as they arise. Tactically, we have moved from an overweight to neutral position in sterling and from neutral to undeweight on euro high yield.While we are still underweight core government bonds,Read More »
IMD and Pictet join forces to celebrate and reward leading family enterprises.IMD Lausanne is a world-leading business school based in the Lausanne region. Its Global Family Business Centre, which has operated for more than 30 years, was the first institute to focus on family businesses, their values, the principles they champion and their particular characteristics.In October 2018, Pictet joined forces with IMD to the IMD Global Family Business Award, a prestigious annual prize presented to a company that successfully combines family and business interests, tradition and innovation, while at the same time fully assuming its social responsibilities.“As owners and managers, Pictet’s partners are themselves entrepreneurs, and the way we operate is similar to a family business. We understandRead More »