How do professional investors view the capital market year ahead, what risks could weigh on the markets, what opportunities could they spur? As in every year, capital market experts at the Lupus alpha investment focus have once again ventured a look into the future – and provided an insight into how they position themselves and the assets they are responsible for in this environment. Overall, the panel showed that despite all the uncertainties and geopolitical risks, large investors continue to see opportunities in Europe, but also in selected sectors and in Asia.
Armin von Buttlar, Board of Management at Aktion Mensch and responsible for investment
stressed the importance of quality and risk management: “We’re quality investors and remain true to our long-term strategy.” Despite the uncertainties on the market, US exposure was only cautiously reduced as broad diversification remained necessary: “Our asset managers have reduced risk during the year, especially from the American market.” Overall, we’re satisfied, but more could have been achieved if we’d taken more risks.” He rejected crypto: “If I don’t understand something, I don’t invest.”
Bernd Franken, Managing Director of Capital Investments at Nordrheinische Ärzteversorgung, was critical of the equity markets: “It’s almost too good to be true.” He warned of the risks posed by US debt and growing political influence on the central bank: “Confidence in the dollar is the biggest risk for the capital markets in the short term.” He took a pragmatic view of armaments: The Bundeswehr is enshrined in our constitution, and we are a NATO partner." He viewed cryptocurrency, on the other hand, as pure speculation with no intrinsic value.
Carsten Roemheld, capital market strategist at Fidelity International, also highlighted the strong performance of equity markets, but warned: “The currency component’s already causing a great deal of concern.” He saw Asia as a growth region. His reasoning: “Asia has the advantage of being able to better compensate for the shortfalls in capacity that aren’t going to the US now.” He was cautious on the AI bubble: “If everyone’s talking about the bubble, then it probably isn't one”.
Dr. Götz Albert, CIO at Lupus alpha, highlighted the opportunities in Europe and for small and mid caps: “Germany has returned spectacularly, with a performance of 15 to 20% in the small cap area.” And he stressed the depth and breadth of the European equity market: “Europe’s economy is much more diverse than is apparent from the large cap indices.” He also mentioned convertible bonds as an attractive addition to the portfolio: “They’re probably the hottest horse in our stable right now.”