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Memory of a Quarter Century: How Long It Has Taken Markets to Recover From Each Financial Crisis

Creand Wealth Management, an entity specialized in private banking, addresses how financial markets have behaved after those periods of crisis, with the aim of analyzing how long they took to recover and observing the impact of those crises on the development of stock markets in the medium and long term.

The Dot-Com Bubble (1999–2000)
The dot-com bubble crisis refers to the period between the end of the 20th century and the beginning of the 21st, where companies whose business was based on technological advances experienced very rapid growth, which led to problems derived from the lack of knowledge about those new business models and a miscalculation regarding expectations of profit generation.

This crisis gave rise to the massive bankruptcy of tech companies and a reduction of jobs related to the sector, with a drop of more than 82% in the Nasdaq-100, the U.S. stock index that includes the 100 most important technology companies, during the period between March 27, 2000, and October 9, 2002. The index took 15 years to recover, although the growth experienced since 2015 has allowed it to increase its stock market value by 405% over the last decade.

The Global Financial Crisis (2007–2008)
This was the most serious financial crisis since the Great Depression of 1929, caused by a situation where excess credit and laxity in granting mortgages to people with low credit profiles (subprime) converged. Mortgage debts multiplied, causing a wave of foreclosures that ultimately pushed systemic entities into bankruptcy, such as the case of Lehman Brothers in September 2008. This situation led to a global crisis of confidence and a freeze in credit granted to both companies and individuals.

This crisis caused a sustained drop in financial markets globally, which lasted until 2010. If we take the MSCI World index as a reference, a broad global equity index that represents the performance of mid- and large-cap equity, markets took almost six years (February 2013) to reach the highs prior to the crisis.

The European Sovereign Debt Crisis and the Euro Crisis (2010–2012)
The increase in public and private debt levels worldwide, to stimulate growth and rescue entities after the great financial crisis, fostered a breeding ground that led to a sovereign debt crisis, a banking system crisis, and an economic system crisis in the European Union. This scenario triggered a wave of downgrades in the credit ratings of several European states’ government debt.

The impact was especially significant in countries like Spain, Italy, Portugal, and Greece, whose chronic deficit levels worsened due to a lack of control. The loss of confidence in these markets caused a sell-off of debt from countries with higher exposure to risk and an increase in the risk premium that led to a generalized loss of confidence.

If we take as a reference the evolution of the main indices of Spain and Italy, the two most important economies in the eurozone that suffered the impact of the debt crisis, we observe that in Spain, the Ibex has not returned to the levels of 11,900 points until January 2025, despite already coming from a downward trend due to the 2007 crisis, when it had reached its all-time highs, standing at 15,945 points in November 2007.

In the case of Italy, its benchmark index, the FTSE MIB, suffered a 72% drop from May 18, 2007, to March 9, 2009. After a slight recovery during that year, it took almost nine years to recover the levels reached in September 2009 (23,900), in April 2018.

The Market Drop Due to the COVID-19 Pandemic (2020)
The global pandemic caused by COVID-19 is another example of a black swan for markets. It unexpectedly affected the entire planet at the beginning of 2020, and caused lockdowns and closures never before seen worldwide. Taking the MSCI World as a reference, in just two months, markets fell 34%, from February to March 2020, as a result of nervousness and the paralysis of economic activity. In fact, two of the five largest stock market crashes in history occurred almost consecutively during the first days of the health crisis, on 03/12/20 (-9.9%) and 03/16/20 (-9.9%).

Despite that nearly 20% drop between January and March 2020, the recovery was also very fast. Markets had already recovered pre-pandemic levels by December of that same year and, from that moment on, stock markets have experienced robust growth, driven by the momentum of large technology companies.

The Impact of Global Inflation and Restrictive Monetary Policies (2021–2025)
After the COVID-19 pandemic, the global economy faced a scenario of rising energy prices, never-before-seen fiscal stimulus, and a supply chain crisis that caused a significant increase in global inflation. The rise in prices, along with restrictive monetary policies by major central banks, posed some challenges for the economy: minimizing the rising cost of credit and the drop in investment and consumption, market volatility, and the risk of economic stagnation.

Nonetheless, the impact was limited in the markets. According to the MSCI World, from the historical high reached in December 2021 up to that moment—when markets were riding a bullish trend driven by the progressive return to post-COVID-19 normalcy—stock markets took 26 months to recover (February 2024), and from that moment, they have experienced sustained growth.

The Return of Donald Trump to the U.S. Presidency (2025)
The growth potential of the markets in recent years, mainly under the momentum of technology companies, has been halted following the arrival of Donald Trump to the presidency of the U.S., in his second term. His aggressive tariff policy has caused declines greater than 10% in financial markets globally. The MSCI World fell 11.29% and recovered the levels prior to the announcement (3,668 points) on May 1, 2025. In particular, markets suffered major declines after the so-called Liberation Day, last April 2, when Trump announced his massive tariff package. However, it is still too early to see the short- and medium-term impact and how the stock markets will recover.

Patience, Discipline, and Diversification
In a financial environment that is in constant change and evolution, black swans—those unpredictable surprises that can drastically alter markets—will always be present. From economic crises to global pandemics, events that seem distant and unlikely can happen at any moment and affect the stability of assets and challenge traditional strategies. However, history teaches a fundamental lesson: patience and discipline, along with proper diversification, are the keys to surviving and thriving in times of uncertainty.

Remaining invested during sharp downturns, far from being a risky strategy, is actually one of the most prudent decisions an investor can make. Juan Litrán, analyst at Creand Family Office, explains that “market corrections, no matter how painful they may seem in the short term, have historically been the breeding ground for long-term opportunities. Black swans, though challenging, also bring with them a market recalibration that, for those who stay true to their diversified investment strategies, offers significant returns once the volatility is overcome.”

On the other hand, diversification, far from being just a technique to mitigate risks, becomes a lifeline in the face of global uncertainty. According to Litrán, “by spreading risk across different asset classes, sectors, and geographies, investors not only protect their portfolio against the unexpected, but also position themselves to capture growth when the market recovers.”

Thus, what today seems like a black swan, with the passage of time, can be perceived as an opportunity. “That is why it is essential that investors do not get carried away by emotions or panic that distance them from their long-term goal. Investing requires vision, discipline, and above all, a well-diversified strategy that withstands the test of time, even in the most turbulent moments,” adds Litrán.

The American Continent Led Wealth Creation in 2024

| For Amaya Uriarte | 0 Comentarios

The global wealth landscape continued to evolve in a year marked by shifts in the economic environment. According to the 2025 edition of the UBS Global Wealth Report, global wealth increased by 4.6% in a dynamic rebound after registering 4.2% growth in 2023, thus maintaining an upward trend.

The report’s findings indicate that the pace of growth was quite uneven, with North America contributing the most, while the American continent as a whole accounted for the majority of the increase: over 11%. “The stability of the U.S. dollar and the dynamism of financial markets contributed decisively to this growth,” the document notes.

In contrast, the Asia-Pacific (APAC) region and the one comprising Europe, the Middle East, and Africa (EMEA) lagged behind, with growth rates below 3% and 0.5%, respectively.

Key Trends
Focusing on geographic trends, the report notes that adults in North America were, on average, the wealthiest in 2024 (USD 593,347), followed by those in Oceania (USD 496,696) and Western Europe (USD 287,688), while Eastern Europe recorded the fastest growth in average wealth per adult, with an increase of over 12%.

However, measured in U.S. dollars and in real terms, more than half of the 56 markets in the sample not only did not contribute to global growth last year, but actually saw a decline in average wealth per adult. Despite this, Switzerland once again topped the list of average wealth per adult among individual markets, followed by the United States, the Hong Kong Special Administrative Region, and Luxembourg. Notably, Denmark, South Korea, Sweden, Ireland, Poland, and Croatia recorded the largest increases in average wealth, all with double-digit growth rates (in local currency).

Another striking finding from the report is that the number of dollar millionaires increased by 1.2% in 2024, representing a rise of more than 684,000 people compared to the previous year. Once again, the United States stood out by adding more than 379,000 new millionaires—over 1,000 per day. “The United States, mainland China, and France recorded the highest number of dollar millionaires, and the U.S. alone accounted for nearly 40% of the global total,” the findings state.

According to UBS, over the past 25 years there has been a notable and steady increase in wealth worldwide, both in total and across each of the major regions. In fact, total wealth has grown at a compound annual growth rate of 3.4% since 2000. “In the current decade, the wealth bracket below USD 10,000 is no longer the largest segment in the sample, as it has been surpassed by the next bracket, between USD 10,000 and USD 100,000,” they note.

Over the next five years, the report’s forecasts for average wealth per adult point to continued growth, led by the United States, as well as China and its area of influence (Greater China), Latin America, and Oceania.

From the Classic 60/40 Portfolio to the 40/30/30 Strategy: It Is the Moment for Alternatives

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For decades, the famous 60/40 portfolio, which allocates investments with 60% in stocks and 40% in bonds, was considered the standard model of diversification for conservative and moderate investors. But times have changed, and with them, the fundamentals that supported this strategy. A recent report published by Candriam questions the current effectiveness of this traditional model in the face of an economic landscape marked by volatile inflation, persistently high interest rates, and growing geopolitical tensions. In addition, it highlights the relevance of including alternative assets in portfolios.

Although stocks performed well in 2023 and 2024, driven by moderating inflation, future expectations are more modest. Interest rates continue to constrain equity valuations, while bonds continue to offer reduced returns and less protective capacity. The consequence: the breakdown of the balance that made the 60/40 model a reliable option to face adverse scenarios.

The study underscores that despite its strong historical performance over the past two and a half decades, the risk profile of the 60/40 has generated serious concerns. A nominally allocated portfolio in this proportion has shown a correlation close to 1 with the equity market, which in practice makes it a reflection of stock behavior. This means that in times of crisis, such as in 2008 or during the market collapse due to the pandemic in 2020, the 60/40 did not offer the protection many expected. For most investors, losses exceeding 30% are not acceptable, which raises the urgency to review the model and seek additional, more resilient sources of diversification.

The document, signed by Johann Mauchand, Pieter-Jan Inghelbrecht, and Steeve Brument, proposes a new formula to restore diversification and improve the risk-return profile of portfolios: the 40/30/30 strategy, which includes alternative assets as a third key component.

Increasing Portfolio Resilience: The 40/30/30 Approach
For Candriam, the answer lies in diversifying beyond traditional instruments. The proposal: to replace 30% of a 60/40 portfolio with alternative assets, using the Credit Suisse Hedge Fund Index as a reference. The result, according to the historical analysis, is compelling: higher returns, lower volatility, and better downside protection.

The new 40/30/30 portfolio, composed of 40% stocks, 30% bonds, and 30% alternatives, showed a 40% improvement in its Sharpe ratio, a metric that assesses risk-adjusted returns. Even using a passive index-based allocation, the benefits were significant.

Charting a New Direction
Candriam’s study warns about a crucial aspect that many investors overlook: not all alternative assets are the same, nor do they behave in the same way under different market conditions.

Using broad indices as a reference is useful as a starting point, but it also highlights a structural challenge: the universe of hedge funds and alternative strategies is immensely diverse, and their performance can vary significantly. The difference between properly selecting which type of alternative to include in a portfolio—or not—can have a decisive impact on the final outcome.

To address this problem, Candriam proposes a functional allocation framework designed to go beyond the simple grouping of assets under the “alternatives” label. Instead of treating these strategies as a homogeneous block, the firm suggests classifying them according to the functional role they play within a portfolio, dividing them into three broad categories: downside protection, generation of uncorrelated returns, or capture of upside potential.

This segmentation enables the construction of more resilient and efficient portfolios, adjusting them dynamically according to the economic environment. The key, according to Candriam, lies in an active and centralized allocation that responds to market changes in real time.

Implications for Asset Allocation
Candriam concludes that adopting this more flexible and functional approach can improve results in three essential dimensions: higher returns, lower risk, and better-controlled drawdowns. To achieve this, it recommends two simple but powerful actions: selecting alternative assets that fulfill one of the three defined roles and dynamically rebalancing the portfolio according to the macroeconomic context.

The conclusion of the report is clear: the 60/40 model is not dead, but it does need a thorough revision. In an increasingly uncertain environment, the strategic inclusion of alternative assets could be the key to building truly diversified portfolios prepared for the future.

Vanguard Reduces Fees on Its Range of Fixed Income ETFs Available to European Investors

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Vanguard has announced the reduction of fees on seven of its fixed income exchange-traded funds (ETFs) available to European investors, effective July 1, 2025. According to the firm, this measure reinforces Vanguard’s commitment to making fixed income investing more accessible, especially in a context where bonds are playing an increasingly important role in investors’ portfolios.

“The bond market is currently twice the size of the equity market, but it remains opaque and costly. Investors deserve something better. At Vanguard, we believe that in investing, you get what you don’t pay for. Costs matter. By reducing fees, we are helping to make fixed income more accessible and transparent. We estimate that these changes will represent approximately 3.5 million dollars in annual savings for investors. We have already expanded, and will continue to expand, our fixed income offering throughout this year,” said Jon Cleborne, Head of Vanguard for Europe.

The following ETFs will have their fees reduced starting July 1.

Vanguard Positions Itself in Fixed Income
Vanguard is the second largest asset manager in the world, with 10.5 trillion dollars in assets under management globally as of May 31, 2025. Its fixed income group, led by Sara Devereux, manages more than 2.47 trillion dollars globally, combining deep expertise to deliver precise index tracking, prudent risk management, and competitive performance.

Earlier this year, Vanguard expanded its range of European fixed income products with the launch of the Vanguard EUR Eurozone Government 1–3 Year Bond UCITS ETF, Vanguard EUR Corporate 1–3 Year Bond UCITS ETF, Vanguard Global Government Bond UCITS ETF, and Vanguard U.K. Short-Term Gilt Index Fund.

Following these changes, the weighted average asset fee of Vanguard’s European range of index and actively managed fixed income funds will be 0.11%. Currently, Vanguard offers 355 fixed income index products in Europe, and on average, its range of fixed income ETFs is the most cost-effective in the European market. Across its entire product offering in Europe, the weighted average asset fee will now be 0.14%.

Companies Risk Suffering More Acute Supply Chain Failures in 2025

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In this 2025, organizations face an increased risk of suffering acute supply chain failures as a result of growing global geopolitical tensions and protectionist trade strategies, according to a new report published by Marsh.

According to its analysis, in addition to the risks associated with the reconfiguration of global trade and geopolitics, the report concludes that changing market and policy dynamics present both challenges and opportunities for organizations in the energy transition, especially regarding carbon credit markets (CCMs) and debt-for-nature swaps (DFNSs).

One of the findings highlighted in the report is that organizations trading with connector countries to circumvent existing or anticipated trade controls, or that have suppliers doing so, may be more exposed to disruptions induced by trade policies in the months and years ahead. “As a result of deteriorating relations between major trading partners, governments may also impose trade barriers on goods coming from connector countries, especially those that include components from the originally targeted country, which could create significant volatility in the global supply chain,” it notes.

What Can Companies Do?

To improve their resilience to supply chain shocks arising from the current geopolitical landscape, the report recommends that organizations review China’s commitment to its trade strategy and the underlying objectives of U.S. trade policy, and consider to what extent the current connector model will persist in relation to their business models.

The Political Risk Report states that changing market and policy dynamics present both challenges and opportunities in the energy transition, echoing the findings of the World Economic Forum Global Risks Report 2025, in which environmental risks dominate the 10-year horizon.

While global CCMs made significant progress at COP29 and DFNSs have also gained momentum, challenges remain in both areas regarding political risk and the possibility of default. Additionally, the growing climate compliance obligations, especially those stemming from new European Union regulations, may present operational risk challenges for organizations.

“Increased risks around the economy, geopolitics, and climate change are creating an incredibly complex operating environment, unlike anything organizations have experienced in decades. Those who build their ability to understand, assess, and mitigate the risks facing their operations are likely to be better positioned to identify opportunities where others only see ambiguity and to gain a competitive advantage in these uncertain times,” said Robert Perry, Global Head of Political Risk and Structured Credit at Marsh Specialty, in light of these findings.

High-Net-Worth Families Around the World Are Accelerating the Transfer of Wealth to Their Heirs

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The “Great Wealth Transfer” is underway, and inheritance patterns are changing, with significant implications for the distribution of wealth and financial markets. A study by Capital Group, a firm specialized in active investments with approximately $2.8 trillion in assets under management, indicates that high-net-worth (HNW) families around the world are accelerating the transfer of wealth to their heirs.

The study surveyed 600 high-net-worth individuals from Europe, Asia-Pacific, and the U.S. to understand their approach to inheritance and their own succession planning.

“It is estimated that in the coming decades, baby boomers in the United States, Europe, and developed countries in Asia will transfer trillions of dollars to younger generations. Millennials and Generation Z are receiving larger inheritances at a younger age and could benefit from a financial advisor’s market knowledge and long-term investment perspective. At Capital Group, we have built lasting partnerships with wealth managers based on the belief that expert financial advice and strong long-term investment performance drive better outcomes for asset holders and their beneficiaries,” says Guy Henriques, President of Distribution at Capital Group in Europe and Asia.

Attracting the Next Generation of High-Net-Worth Individuals
According to the study, nearly half of all respondents (47%) inherited directly from their grandparents, and the majority (55%) received between $1 million and $25 million. Millennials are more likely to turn to social media and “finfluencers” for investment advice when inheriting (27%) than to financial advisors (18%). Furthermore, 65% of Generation X and Millennial heirs who participated in the study say they regret how they used their inheritance money, and nearly two in five wish they had invested more.

In the case of Spaniards, they are more likely to invest their inheritance: 37% compared to the 33% global average.

Maximizing the Potential of Inheritance
According to a recent study, three quarters of respondents say they have difficulty communicating their inheritance plans, and the majority turn to lawyers (61%) or accountants (49%) to manage them, while only 20% turn to financial advisors.

Additionally, 79% do not specify how the inherited capital should be used, which contributes to much of that money remaining idle or underutilized: only 22% is invested in funds and just 11% is allocated to pension plans.

This lack of strategy is reflected in the dissatisfaction of asset holders: 60% are unhappy with how they used their inheritance, and one third regret not having invested enough. In Spain, 54% of high-net-worth individuals wish they had directed more of their inheritance toward investment.

“Our study reveals that most of these asset holders wish they had used their inheritance differently and invested more. At Capital Group, our mission is to improve people’s lives through successful investing. We believe that if they consider investing part of their newly acquired capital, individuals with substantial wealth could build long-term prosperity. As a company with 94 years of experience, we have partnered with clients to invest across multiple generations, and as markets rise and fall, it is important to remember the value of staying invested for the long term,” concludes Guy Henriques, President of Distribution at Capital Group in Europe and Asia.

41% of Global Asset Owners Use Multiple Benchmarks for Their Investments

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41% of global asset owners use multiple benchmarks, while 59% continue to use only one. These are the findings from the “Asset Owner Performance Survey According to GIPS Standards,” conducted by the GIPS Standards Asset Owner Subcommittee and CFA Institute Research, the global association of investment management professionals, in 2024.

“Benchmarks based on asset allocation weighting are the most widely used, with 61% of asset owners employing this type of benchmark. For target returns, the most prevalent is the benchmark based on the actual weightings of asset classes,” explains Hugo Aravena, President of CFA Society Chile.

The GIPS standards are ethical guidelines for calculating and presenting investment performance, based on the principles of fair representation and full disclosure. In recent years, more asset owners have opted to follow these standards. 24 of the 25 most prominent managers in the world state that they comply with the GIPS standards in full or in part when presenting their returns.

The survey shows that 93% of respondents are at least somewhat familiar with the GIPS performance standards, and 67% of the sovereign funds surveyed are in compliance with the GIPS standards, “which demonstrates that the GIPS standards are of utmost importance to sophisticated investors managing large volumes of assets globally.” According to the study, more than two-thirds (68%) require or inquire about GIPS compliance when selecting external managers of liquid asset classes, and 19% require a declaration of compliance for selection.

“Compared to the 2020 report, more asset owners now state that they comply with the GIPS standards, plan to do so in the future, or inquire about compliance when hiring firms to manage their investments. This shows a growing demand for financial performance to be presented in a transparent and fair manner,” says Aravena. Additionally, 8% require their external managers of illiquid assets to declare GIPS compliance, while 41% of them either require or inquire about GIPS compliance when selecting external managers.

Finally, 59% of investors indicate that they already present the returns required by the GIPS standards (i.e., net of fees and costs) to their supervisory body. “We are aware of the need to advance in presenting risk and return indicators that comply with international standards, so that investors have access to more transparent, complete, and standardized information, making it easier to compare among similar investment alternatives,” concludes Aravena.

From Calm in Financial Markets to Sensitive Assets: What Is the Message Amid the Middle East Conflict?

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In less than 24 hours, we have gone from a possible military escalation in the Middle East—following the hostilities between Iran, Israel, and the U.S.—to an announcement of a “ceasefire” and a certain de-escalation of tensions. According to investment firms and international asset managers, this geopolitical situation is clearly reflected in oil prices, but what stands out most is the apparent calm observed in financial markets.

According to Thomas Hempell, Head of Macro and Market Research at Generali AM (part of Generali Investments), on Monday, markets in general reacted with risk aversion, with rising oil prices and falling equity markets.

“Surprisingly, the U.S. dollar initially rose, but that quickly faded, reinforcing concerns about its weakening status as a safe haven. Still, this marks an improvement over the U.S. dollar’s negative response to the growing trade tensions in recent weeks. In fact, a sharper increase in energy costs would hurt energy importers (including the eurozone and Japan) the most, while the U.S. has become a net oil exporter,” Hempell noted. In his view, Treasuries (and bunds) also failed to act as safe havens, with 10-year U.S. debt yields trading around 4.40%.

Meanwhile, stock markets are reacting positively to the Middle East de-escalation, while oil prices fell 3% on Tuesday, and in Europe, gas prices dropped 11%. “The muted Iranian response and rapid ceasefire point to a scenario of de-escalation in the coming days, which will shift attention back to the tariff moratorium—set to expire in 15 days—and to the negotiations over the U.S. tax reform currently in the Senate,” analysts at Banca March acknowledged in their daily report.

“Military conflicts are always unpredictable. Even Middle East experts struggle to anticipate how this war will unfold and what its consequences will be in the coming days, weeks, or months. Before the war between Israel and Iran began, the evolving world order and changing geopolitical landscape—marked by tariffs and trade wars—were already adding uncertainty to expected returns across all asset classes,” analysts at AllianceBernstein noted.

Most Sensitive Markets and Assets

According to Kerstin Hottner, Head of Commodities at Vontobel, and portfolio managers Regina Hammerschmid and Renato Mettler, although there was a widespread expectation of rising oil prices and a flight-to-safety sentiment to start the week, the European market reaction was quite different. “Brent crude futures opened with a sharp increase in Asia at $81, before retreating ahead of the European open and trading just above Friday’s close at around $77.10. Risk aversion was moderate across all asset classes, with equities and bond yields slightly down and the U.S. dollar strengthening. Curiously, gold demand was limited despite rising geopolitical tensions. The muted response suggests markets are in a wait-and-see mode, particularly focused on how Iran will respond in the coming days. So far, the U.S. has announced a 12-hour ceasefire. What happens next will be crucial,” said the experts at Vontobel.

Ebury analysts believe the Israel-Iran war will dominate the currency market following U.S. involvement. In this context, “the U.S. dollar appears to be maintaining its status as a safe-haven currency during times of severe geopolitical instability and has risen against all major global currencies,” they explained. They also noted that the euro is trading almost entirely in response to external events—particularly the war between Israel and Iran—and “is broadly affected by rising oil prices and the fact that Europe is a large net energy importer, whereas the U.S. is an exporter,” the Ebury analysts pointed out. They expect the same trend to persist this week: “The euro opened lower as oil prices continue to climb.”

No Rushing to Conclusions

According to U.S.-based asset manager Payden & Rygel, tensions in the Middle East captured investors’ attention this week, causing market movements just weeks after U.S. equities had recovered from an 18.9% decline. However, they advise staying calm amid the turmoil.

“First, a review of geopolitical crises since 1939 suggests the average market drop from geopolitical events is only 5.6% and lasts just 16 days. Second, markets tend to recover quickly. In 60% of cases, the S&P 500 regained losses within a month of the bottom, and in 80% of cases within two months. Exceptions are usually crises that trigger or coincide with a recession or persistent inflation that keeps federal funds rates elevated, like the 1973 oil embargo. Third, the average return 12 months after a geopolitical crisis was 14%, well above the S&P 500’s average annual return during ‘normal’ times. In other words, unless a recession or rate hike by the Fed is expected in the next 6 to 12 months, a long-term view and looking beyond short-term volatility is advisable,” they said.

A similar message comes from Gregor MA Hirt, Global CIO of Multi Asset at Allianz Global Investors: “Investors should prepare for short-term turbulence in energy prices and inflation expectations. However, as in past crises, excessive market moves could offer compelling opportunities. Central banks—particularly the Fed—may need to reconsider their policy paths if inflation accelerates while growth slows.” For MA Hirt, the coming days will be key in assessing damage to Iranian nuclear facilities, the scale of Iran’s response, and the stance taken by the international community. “All of this will shape market sentiment in the short term,” he added.

Furthermore, Dan Ivascyn, CIO at PIMCO, reminds investors that uncertainty can be a tailwind for fixed income. Ivascyn acknowledges that the market may be witnessing a reversal of U.S. exceptionalism and that other markets may become more profitable, creating an opportunity to diversify away from the U.S.

“This year’s price movements and news are an example of how uncertain the macroeconomic environment is. It’s always important to remind investors that current income drives a significant portion of fixed income returns. Despite high volatility, returns have been quite solid—especially if holding a global portfolio with non-dollar-denominated assets and higher-quality emerging markets. At PIMCO, we take a long-term orientation, use all tools at our disposal, acknowledge great uncertainty, reinforce portfolio resilience, and strive to deliver highly attractive returns for our clients,” Ivascyn stated.

Resilient Portfolios and Caution

Asset managers also emphasize that predicting the outcome is not the game to play, which is why they focus on building resilient portfolios. “The coming weeks present multiple risks to markets, including developments in U.S. tariffs and other policies—but these are two-sided risks, as markets could also ‘climb the wall of worry’ once they pass,” argued Salman Ahmed, Global Head of Macro and Strategic Asset Allocation at Fidelity International.

In his view, from an asset allocation perspective, this is a time to stay broadly neutral toward risk while taking more granular views across regions and asset classes—buying and selling very selectively. “Diversification remains key, as does the flexibility to actively manage risks—including currency positions and selective hedges (e.g., gold),” he noted.

Meanwhile, Michaël Nizard, Head of Multi Asset and Overlay, and Nabil Milali, Multi Asset and Overlay Manager at Edmond de Rothschild AM, acknowledge that in this context, they maintain a cautious view of equity markets amid ongoing economic and geopolitical uncertainty—especially as valuations have returned to high levels. “As for fixed income investments, we hold a neutral duration stance and continue to favor carry strategies, while the dollar’s failure to reclaim its safe-haven status reinforces our negative view,” added the Edmond de Rothschild AM experts.

BoE, BoJ, and Fed: Three Meetings That Highlight the Divergence Among Central Banks

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Central banks take center stage this week, as the Bank of England (BoE), the Bank of Japan (BoJ), and the U.S. Federal Reserve (Fed) will hold their respective meetings. These three monetary institutions have been less active than the European Central Bank (ECB), which has cut interest rates by 25 basis points at each meeting since last September, so expectations for further changes are low.

How have these central banks behaved so far? The BoE’s monetary policy has positioned itself between that of the Fed and the ECB. “Rates have been lowered by 25 basis points per quarter, but concerns about inflationary pressures—exacerbated by rising regulated prices and increases in employment-related taxes—have slowed a faster pace of monetary easing, amid divided opinions among BoE policymakers. A more decisive rate cut is likely approaching, given signs of declining employment, unfilled vacancies, and wage growth, but a cut as early as June would surprise the market,” notes Sean Shepley, senior economist at Allianz GI.

In contrast, the BoJ remains a case apart: while other central banks have hesitated to lower rates in a persistent inflation environment, the BoJ has been reluctant in recent months to raise rates from its current ultra-loose policy, despite inflation exceeding its target. “The institution remains focused on shifting domestic inflation expectations away from levels close to zero and sees risks to growth as potential obstacles to achieving that goal. All indications suggest that, for now, this inaction will remain the BoJ’s prevailing stance,” adds Shepley.

Since December, the Federal Reserve has kept its monetary policy unchanged, after swiftly reducing its target rate from 5.25% to 4.25% over the last four months of 2024. For this meeting, it is expected to maintain the status quo, as it has shown reluctance to take new action.

According to Erik Weisman, Chief Economist at MFS Investment Management, the only point of interest may come from the new set of forecasts in the Summary of Economic Projections (SEP), which could point to slightly slower growth, combined with slightly higher inflation.

“We’ll also be watching the dots—the Fed’s interest rate forecasts—which could shift to indicate only one rate cut this year. Overall, none of this is likely to surprise investors. The Fed will probably acknowledge that the backdrop remains uncertain, and that the best course is to do nothing. As for potential rate cuts, it’s fair to assume they’ve been delayed, and none is likely before the fourth quarter of this year,” Weisman argues.

Focus on the Fed

Although no changes or cuts are expected from the Fed, investment firms agree that the pressure on Powell and the central bank has increased. “One of the hallmarks of U.S. President Donald Trump’s two terms has been his willingness to publicly challenge the Fed Chair whenever he believed interest rates were too high or that the institution had acted too slowly. In fact, Trump has claimed he should participate in monetary policy decisions and has attempted to undermine the central bank’s authority. Moreover, before taking office, U.S. Treasury Secretary Bessent even said that if the government announced in advance who the next Fed Chair would be, it could weaken the current chair’s power,” notes the senior economist at Allianz GI.

These pressures are compounded by the complex geopolitical environment. “If not for exogenous shocks, tariffs, and oil, it seems the Fed has successfully concluded the post-pandemic monetary policy cycle, to borrow Christine Lagarde’s phrasing about the ECB two weeks ago. May’s U.S. CPI data was particularly encouraging. While it’s highly likely that the Fed will reaffirm its ‘wait and see’ stance this week, the FOMC’s dot plot for 2026 and 2027 could show some divergence among members, with hawks and doves emerging, divided over the risks of persistent inflation in the U.S. We wouldn’t be surprised if only one rate cut is shown in the new dot plot. However, we believe the longer-term dots will be more interesting,” says Gilles Moëc, Chief Economist at AXA IM.

According to his estimate, assuming the median projection remains unchanged from March, three cuts (to 3.37%) are expected in 2026. “However, the dispersion around the median might be more telling than the median itself. In fact, we could see a group of doves pushing for quicker cuts and faster convergence toward neutrality,” he adds.

Will the Fed Make More Cuts?

Philip Orlando, Senior Vice President and Chief Market Strategist at Federated Hermes, sees potential for the Fed to cut rates twice this year. “CPI and PCE inflation indicators have declined year-to-date through April and are now at four-year lows. The Fed’s June 18 monetary policy meeting includes an updated summary of economic projections. Officials will need to reconcile their restrictive monetary policy—since the upper bound of the federal funds rate is currently at 4.5%—with the fact that nominal CPI is only 2.3% year over year,” he explains.

In his view, there is significant room to lower rates to 3% over the next 12–24 months, and he expects two quarter-point cuts later this year: “The most likely timing would be September and December, and we expect the Fed to set the stage for these cuts at its June and July 30 FOMC meetings, as well as at its Jackson Hole summit in Wyoming from August 21 to 23. With the prospect of lower rates and no recession on the horizon, we maintain our target of 6,500 for the S&P 500 this year and 7,000 in 2026,” he says.

Markets Watch the Dot Plot

Finally, Harvey Bradley, Co-Head of Global Rates at Insight Investment, notes that beyond Fed Chair Powell’s press conference, markets will closely watch the Fed’s quarterly dot plot for signals on how and when the central bank might resume its cutting cycle.

“In both March and December, the median projection was for two rate cuts by year-end, which is roughly what markets are currently pricing in. Given the uncertainty facing markets, it’s difficult to predict whether the forecasts will change significantly. On one hand, Fed members may now factor in a higher effective tariff rate, with early signs of tariff-related inflation beginning to show. On the other hand, less volatile—or ‘stickier’—sources of inflation, especially in major categories like rent, are showing impressive and potentially sustainable signs of disinflation. The labor market is also showing some cracks, with continuing jobless claims at cycle highs. This could help the Fed continue normalizing its monetary policy. Altogether, the projections may remain largely unchanged,” he argues.

Insight’s base case is for two cuts this year, followed by further reductions in 2026 toward a terminal rate of 3%, driven by below-trend growth outcomes—a landing zone the Fed would likely describe as “broadly neutral.” “In any case, while the Fed remains on hold, we believe this could be a good opportunity for investors to lock in relatively high yields in fixed income while they are still available,” concludes Bradley.

AI Washing: The New Concern for Institutional Investors and Wealth Managers

| For Amaya Uriarte | 0 Comentarios

A new global study by Robocap, a fund manager and investor specializing in robotics, automation, and artificial intelligence (AI) equities since 2016, reveals that 37% of pension funds, insurance asset managers, family offices, and wealth managers—with a combined total of $1.183 trillion in assets under management—are very concerned about false claims made by some companies regarding their use of artificial intelligence and its purported positive impact on operations. An additional 63% expressed moderate concern about this issue.

Based on their experience, Robocap identifies “different types of AI washing.” This may include companies that claim to use AI when they are in fact relying on less sophisticated algorithms. It may also involve overstating the effectiveness of their AI compared to existing techniques or falsely asserting that their AI solutions are fully operational.

Looking ahead, 26% of the professional investors surveyed believe AI washing will worsen slightly over the next three years, while 3% expect it to worsen considerably. However, nearly two-thirds believe the issue will diminish, and 7% think it will remain unchanged.

Robocap is a thematic equity fund focused on pure-play publicly listed companies operating in the global robotics, automation, and artificial intelligence space. This fast-growing theme includes AI-powered cybersecurity, AI software, general automation, industrial robotics, healthcare robotics, drones, autonomous vehicles, key components, semiconductor automation, space robotics, logistics automation, and a wide range of AI applications throughout the entire value chain.

Robocap’s pure-play approach means it invests only in companies where at least 40% of revenues are related to robotics, automation, and AI. Currently, 85% of the portfolio’s revenues are directly tied to this theme. The fund manager is supported by a team of experienced investors and an advisory board of leading technology experts and entrepreneurs who help guide investment decisions.

The Robocap UCITS Fund, launched in January 2016 and managed by a specialized team based in London, aims for a 12% annual return over an economic cycle. It has achieved a net annualized return (CAGR) of 11.84% and a net return of 181% since inception.

Following the release of the study, Jonathan Cohen, founder and Chief Investment Officer (CIO) of Robocap, stated:
“Much like greenwashing, AI washing is a real issue for investors seeking exposure to companies that truly benefit from the growth and operational efficiencies AI can offer. We believe there is a significant misunderstanding and misuse of the term ‘AI,’ as well as a wide gap between technological innovation and the actual revenue derived from it. When selecting investment opportunities, we look for companies with solid underlying exposure to the AI, robotics, and automation theme, a strong business model supported by excellent technology, a good management team, and attractive valuation.”