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Year End 2020 Review and Outlook

I guess we all are happy that we will soon see the back of this Year.  

Annus Horribilis Queen Elizabeth II called 1992 and the year of the Pandemic merits this description even more.

Surprisingly it is here in the UK that rapid progress has been made with respect to mass vaccinations. Letís hope that this will also facilitate the development of herd immunity among the less vulnerable.

Despite all the false starts and dashed hopes the Real Estate markets all over the world were more than resilient. Alternatives to investment in the asset class all offer exceedingly miserable returns and until QE is reversed in a meaningful way the outlook for Property should stay positive.

Retail and Office will be to sectors to keep a close watch on, and Logistics may become overly stretched as the online shopping trend may slow down or even come to a halt..

One word of caution:

Headline returns of most assets are at eye-watering levels. This may be justified in the long run if authorities continue monetary expansion a outrance. But one should not forget depreciation.

I have seen many an office building going up in the City of London only to be pulled down again after a mere 20 years. Inflation prevented any losses on the investment in these cases. But should one rely on this to continue? And how many investors take the need for 2, 3 or 5 percent depreciation into their return projections?

With this word of caution I want to wish all of you, current and (hopefully) prospective partners and clients a Merry Christmas and a Happier 2021!

(December 2020)

Year End 2019 Review and Outlook

Despite all the uncertainties that we experienced recently the Outlook for 2020 is quite benign. Shall one believe the consensus, or try to second guess it and be contrarian, and then again be on the other side of the contrarians? The Macro game could go on and on and I think it is best to concentrate on good selection of individual investments, be they shares, bond issues or properties.

Fees are under pressure in the Institutional Investment world as well as in Private Banking. On the other hand the need for good investment advice is only getting more pressing as populations age, other countries become more prosperous and overall wealth and savings increase. So while the pressure to lower fees is there one has to be realistic and accept that even lower fees allow a good living for most market participants. 

Apart from growing acceptance and use of passive investment tools the other major development during the past year was the growing interest in Impact Investing (including ESG, SRI, Social Investing as the various strains are known for). I think this might be the current fashion but it remains to be seen if these investments can really provide the returns that end investors and savers expect and need to provide for their retirement

I conducted my first major search for an ESG/Impact Fund Manager in 2000. At that time this was a very marginal part of the Investment universe but even then I quickly realized that EVERY investment has a relevant angle and as a consequence the first list of possible candidates contained more than 300 candidates. In that bygone area the real difficulty was to find someone who would even consider looking at this still quite new specialization!

The real way to tackle Climate Change or Social Problems should still be primarily the task of elected governments and one can only hope that regular progress is made on this front.

(December 2019)



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