Swiss-based Asset Management

Who are the winners?

• Investors who, on the one hand, diversify widely: place part of their assets on trends and thereby also take some risks, but who place the majority of their assets in safe and tested funds.
• Markets are subject to constant change. A good investor reacts quickly to these changes and minimises losses or takes profits in good time. The right time to exit is an important guarantee of profit when investing in stocks.

As a result, every investor should make investment decisions together with a professional. This professional performs the investments and monitors them. Just like when building a house, it is always a good idea to seek advice from a person with the appropriate experience and qualifications, such as an architect, who can implement your wishes as you expect. It is just the same in the financial world.

The financial market is considered exciting and many people like to trade on the markets themselves, but lack the in-depth knowledge. However, this should only be a small part of their assets, e.g. 30%, and never their total assets, as the risks are often misunderstood.

Trust in our investment strategies which have proven themselves over decades and which ensure sustainable profits instead of chasing after short-term expected returns that more often than not do not materialise.

Independent asset managers vs. Bank’s own asset management

An independent asset manager looks at the entire financial market with all of its possibilities. Banks orient themselves primarily towards their own products. These are not necessarily worse, but no bank can represent all of the products available on the market. This means that the choice of investment vehicles is always smaller with a bank. It is also possible that products might be offered because the institution earns more with one than another, meaning that the selection of the products is not based purely on their quality.

An asset manager is always the link between the market and the investor. The equality of interests of the asset manager and their customer is of fundamental importance for long-term mutual success.

The custodian bank ensures the security of the capital.

The year 2022 was a difficult environment for investors. High inflation, rising interest rates, and economic uncertainty led to sharp losses in equities and fixed income. For example, the S&P 500 fell 25% and, even more surprisingly, many fixed income benchmarks fell at the same rate. As long as inflation remains above 3%, the positive correlation between stocks and bonds will likely continue. Strong recoveries and renewed selling are likely, but uncertainty and volatility will likely persist even though inflation may have peaked.

As a result, traditional 60/40 portfolios continue to offer a very poor risk/reward ratio. It is more important than ever that investors diversify their portfolios to include alternative assets such as commodities, hedge funds and certain areas of private debt.

Private debt has been in the spotlight following the passage of new regulations that restrict banks' ability to lend to small and medium-sized businesses. These include Basel III, the Dodd-Frank Act, and the Volcker Rule, which have greatly increased banks' costs of lending and forced them to limit themselves to larger companies, leaving small and medium-sized businesses completely unserved.

This has created attractive investment opportunities for private debt fund managers, who are not subject to the above regulations and can process loan applications much faster than traditional banks thanks to their non-bureaucratic style.

Private debt investments refer to all types of loans made by non-banks. The universe is broad and includes various sub-strategies such as trade financing, factoring, real estate bridge loans, private loans, company loans, all with different risk/return/liquidity profiles. In recent years, private debt investments have shown low correlation with traditional markets, which is very helpful for optimal portfolio diversification. This allows investors to increase returns while reducing risk.

Investors should focus on areas within private debt that combine high yields, strong protection, and short maturities, which is the best combination for an environment of high inflation and low growth, as well as potentially sustained interest rate increases. These characteristics are found in certain niches of the senior secured direct lending space. Short-term loans of relatively small amounts are often the most overlooked areas where banks are not providing funds at all. The scarcity of capital means that investors can earn high single-digit or even double-digit returns with very little risk. Default rates are typically very low and recovery rates are very high, which means that defaults are very rare in diversified, well-managed loan portfolios.

Alternative investments have long been an asset class reserved for a certain elite with deep pockets. However, this is no longer the case, as several private-debt fund managers now provide access to a broader audience through open-end or closed-end mutual funds. Open-end funds have the advantage of providing liquidity to investors, similar to traditional fixed income products.