2019 Top 400 ranking: 9
Diversification should be the first objective of any large institutions because managing risk is a key source of long-term performance.
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US fixed income can be a valuable source of diversification for European investors, but in the past the cost of hedging of the US Dollar exposure was high, neutralizing this benefit. The situation has changed, and the cost of hedging for Euro-based investors is much lower than in the recent past. Furthermore, we expect this cost will remain low.
Cyclical conditions are turning more positive for Europe. Easing geopolitical risk and the prospect of massive fiscal resources (national and EU-wide) and monetary support could support a recovery in 2021. The improved sentiment could benefit European assets, equities in particular, that have been a laggard due to the pandemic. This could lead to a catch up of EU equities in relative terms vs other markets.
ECB strengthened its intention to make its action long-term: The ECB revised its medium-term inflation target substantially on the downside . Core inflation is forecast to reach only 0.9% in 2022 (0.8% in 2020, 0.7% in 2021). The ECB justified the adjustment of the size of ...
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