Economic cycles have been a crucial driver for financial markets, making regime-based dynamic asset allocation (DAA) a common practice in supporting optimal portfolio construction. Changes in key economic indicators, monetary policy trends and the evolution of financial leverage have proven a reliable guide in identifying business cycle phases.
The new economic paradigm, triggered by the 2008 Great Financial Crisis (GFC), overcame the traditional bidimensional approach, which leveraged on growth and inflation for the definition of economic phases. In a post-GFC world of ever-growing debt, the role of monetary policy was so strong and persistent that it became one of the primary drivers of asset class returns and correlation.
Taking advantage of its multi-year experience in cross asset modelling, Amundi Institute leverages artificial intelligence for its investment approach, in order to tackle complex and fast-evolving financial markets. The Institute developed an innovative tool called the Advanced Investment Phazer (AIP), which embraces the complexity and multi-dimensions of regime determination.
You can now read the full whitepaper at the link below
