e-fundresearch.com: How do you plan to make money in the fixed income universe in 2015 and to what extent has the ECB’s QE announcement influenced your portfolio positioning?
Hans van Zwol: The main theme is to profit from the ‘search for yield’ by putting more emphasis on higher yielding asset categories. This can be Eurozone peripheral bonds, but also so-called credits, like high yield and corporate credits or emerging markets bonds and currencies. We also witness a decline in market liquidity which every now and then triggers short periods of, what we call ‘air pockets’ with high volatility. These moments create excellent opportunities for flexible investors to profit from market dislocations. We designed our investment process in such a way that we are not dependent on certain market circumstances and aim for a highly diversified portfolio in which we express a high number of independent views.
By the end of the summer of 2014, our conviction that QE was unavoidable rose substantially and we decided to position the portfolio accordingly. From the fall of 2014 we anticipated QE announcements by positioning for lower yields. Also, we held substantial positions in fixed income asset categories that we expected to profit from the search for yield theme, like Italian and Spanish government bonds, credits and emerging markets bonds. The actual QE announcements by the ECB were fairly in line with our expectations and gave no reason to change our portfolio positioning.
e-fundresearch.com: To what extent does fund size impact the efficiency and effectiveness of your investment strategy?
Hans van Zwol: In our case, fund size is no problem. We operate in relatively liquid markets and make use of almost all instruments available. This means that we, for instance, can easily use futures or swaps in case market liquidity in other instruments is not sufficient to implement desired positions or if the costs of implementation are too high.
e-fundresearch.com: Thank you!