e-fundresearch.com: What are your personal lessons learned from 2014 market developments?
Edoardo Ugolini: 2014 has been a very challenging and interesting year for a macro manager. The first lesson learned during last year was: in a zero rate environment “protect your performance as there is no comfort zone”.
Hinweis: Edoardo Ugolini (Zest Asset Management) ist Speaker beim
ARC Outlook 2015 am 21. Jänner in Wien
The second lesson learned was to be nimble in booking your profit or in cutting your losses, as volatility is back in a mature equity bull market. The third and final lesson was to pay more attention to political developments as monetary policies are in the final part of their effects on the economy and financial markets and now politics (i.e. fiscal policies) are leading the dance, this is a well-accepted challenge for us given our back ground.
e-fundresearch.com: With regards to the new year 2015: How optimistic is your view into the future and what obstacles and challenges should investors be prepared to overcome in 2015?
Edoardo Ugolini: Global economies are entering 2015 without structural imbalances: growth is weaker than in previous cycles as credit cycle (leverage) is not providing the usual boost to growth, on the other hand this does not create any “bubble risk” globally. The indicators I would like to be more regarded by market players are two: disposable income in USA and Japan and unemployment in EZ, as lack of real wages growth and unemployment are the causes of deflation treats in the (developed) world. (and not vice versa….) If policy makers will address firmly their attention to these issues, the outlook wil be more rosy than expected. If not, tail risks could develop during the year.
e-fundresearch.com: Why should investors consider an increase in allocation to your asset class in 2015?
Edoardo Ugolini: In a zero rates world investors willing to achieve a positive real return are forced to embark more and more risk in their portfolios , call them equity, duration, fx, or credit. Buy and hold strategies could be not rewarding on a 12 months horizon as markets could prove themselves to be quite volatile, so a professional investment manager able to manage these risks is important in 2015. Global macro investment management does not mean a “guru approach” (I-know-the-future like approach), rather the ability to weigh the risks in the portfolio at asset class level and at aggregate level, to cut losses and to take profits timely, this is our job and I believe that 2015 will be a good year for our strategy.
