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Michael Averett Joins Bolton Global Capital as Head of Business Development

Michael Averett, Head de Business Development y complex manager de Bolton Global Capital Copyright: LinkedIn. . Foto cedida

Bolton Global Capital has announced the hiring of Michael Averett as the Head of Business Development. He will also serve as a member of the firm’s Executive Committee and as the Complex Manager for Bolton’s Miami and Weston, Florida offices.

Throughout his 21-year career at Citibank, Averett has held multiple senior-level positions in the firm’s wealth management complex, most recently as Regional Director of Sales for the International Personal Bank (IPB) division, has highlighted Bolton in a press release. In this role, he led a team that managed $10 billion in client assets and generated annual revenues in excess of $100MM for Citi’s high-net-worth offices in Montevideo, San Juan and San Francisco.

Prior to that, Averett managed IPB’s Client Solutions team and served as IPB’s Sales Head for all of its U.S.-based offices.

“We are delighted to bring on board a professional with such broad knowledge and experience in the international wealth management business”, stated Ray Grenier, CEO.

Established in 1985, Bolton Global Capital is an independent FINRA member firm with an affiliated SEC registered investment advisor. The firm manages $12 billion in client assets for US based and international clients through 110 independent financial advisors operating from branch offices in the US, Latin America and Europe.

Deutsche Bank Expands in Southeastern U.S. with Charlie Burrows Promotion

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Charli Burrows — Charlie Burrows, Head del mercado onshore del sureste de EE.UU. Copyright: LinkedIn. Foto cedida

Charlie Burrows has been promoted as Head of the US Southeast Market at Deutsche Bank’s International Private Bank. The appointment is part of a strategy of expansion in the southern region of the North American power.

“Florida is becoming more and more important as some of our onshore clients choose to move there permanently. Charlie Burrows will do a great job leading our growing onshore Deutsche Bank wealth management team in Miami”, Arjun Nagarkatti, Head of the International Private Bank for Americas at the bank, posted on Linkedin.

In addition to Miami, Burrows will oversee the bank’s expansion in Palm Beach, Naples, Tampa Bay and Jacksonville, Funds Society confirmed with company sources.

“Anthony Valvo (Managing Director and Market Head for New York and Southeast at Deutsche Bank) and I are so excited by the momentum and enthusiasm of our Miami team and what we offer to our clients through our wealth planning capabilities, custom real estate lending solutions and our domestic and offshore expertise”, added Nagarkatti.

With more than 35 years in the industry, Burrows has worked at JPMorgan Chase & Co and Merrill Lynch‘s US Trust Cash Management Solutions Segment Executive division, according to his LinkedIn profile. The executive has been with Deutsche Bank since 2011.

ESG in Practice Series: Stéphane Rüegg on Credit

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RUEGG-Stephane-DSC_0889-2100x1402-7a34cf1f-2f9d-4e5e-8009-cc9ba5fad3dd — Pixabay CC0 Public DomainStéphane Rüegg, Pictet Asset Management. Stéphane Rüegg, Pictet Asset Management

Credit expert Stéphane Rüegg at Pictet Asset Management discusses what’s on the mind of his clients, the nascent green bond market and his very personal view of responsible investing.

Why does investing sustainably matter to you?

My awareness came about in different ways. First of all, watching the Rio Summit as a teenager, I vividly remember Brazilian indigenous leader Chief Raoni talking about the preservation of the Amazon forest. Also, I am a history buff and it occurred to me that lots of battles in military history would have had very different outcomes with climate change. The French were victorious at Austerlitz because the lake was frozen and they fired cannonballs that broke the ice; that lake has now dried up. A harsh winter during the battle of Teruel in the Spanish Civil War saw temperatures drop to minus 20 – nowadays they climb to 10 degrees in January. One contributing factor to the French Revolution was the poor harvest of 1788 which caused food shortages and high prices. These examples abound. Finally, I have lived in Asia and there are very few places where you can drink tap water, except perhaps Japan and Singapore. People drink from plastic bottles, which are not recycled. These different thoughts have made me reflect about the environment.

Even within Europe, there are some clear cultural distinctions around ESG

What are clients asking about?

Up until a few years ago, governance was the main ESG factor that influenced investments, and the environment mattered less because of the misalignment that former Bank of England governor Mark Carney calls ‘the tragedy of the horizon’: investment managers are judged on their 3-year track record while the impact of climate change will only be apparent in the coming decades.

However, with extreme weather events there has been a welcome realization that we are in a climate emergency. It has become a higher priority in Europe; Asian investors are looking at these developments and asking a lot of questions. Overall, clients’ main concern is ultimately driven by regulation. In Europe, we are moving towards a shared green taxonomy, but we will have to see how investors use it in the long run. It should not just be about hitting a threshold; we also need data that allows to track the progress of a company over the long term.

New standards will be gradually rolled out in Europe but even within the region, there are some clear cultural distinctions around ESG. German clients do not like nuclear power while others, like the French, think it’s necessary to make the transition to clean energy. In Belgium, home to many large brewers, the green label does not exclude alcohol.

Often, awareness about climate is the result of an environmental disaster, like Fukushima in Japan. In the US, the BP oil spill in the Gulf of Mexico helped change attitudes among American investors. The increased frequency of hurricanes and a spell of intense cold in Texas at the beginning of the year have intensified concerns about the environment across the US.

What risks investors in green fixed income should be aware of?

If I told you, imagine a bond with a social objective that allows people with little money to enter the property market and to integrate into society better, would you invest? Well, imagine it’s 2008 and I have just repackaged subprimes to you as a way to help American society reduce its fractures. So you have to be careful not to be dazzled by the green.

It’s a nascent market that requires you to have some major principles to guide your investments, like the moral compass that guides your personal life. You need to analyse the instrument as much as the issuer and follow up closely to ensure the company delivers on its promise. We are spoiled at Pictet because as a rule, we have what we think is the best supplier for each aspect of E, S and G – at the end of the day you need the data to understand ESG.

A broad-brush approach to evaluating companies’ ESG performance does not work, it is crucial to understand the dynamics of each sector. The environment is key for mining companies, for example, but the social aspect is equally important, in terms of accidents and working with local communities. A case in point is mining company Vale in Brazil where a lethal dam disaster caused the company to lose its position as the world’s largest iron ore extractor and sparked a governance and safety review. The way a company sets prices, or it treats customers or suppliers is just as important as the environment.

Are green ETFs an easy option for fixed income investors?

Green bonds ETF allow investors to dip a toe in the water, but they simply replicate an index. Bond index managers only include issuers that meet their eligibility criteria, so depending on data availability bonds may not be eligible for inclusion for a few months after issuance. When a company doesn’t report properly, it can take months to exclude the bond from the index.

And then it comes down to whether you agree with the benchmark. Do you include green bonds from companies that pollute? Do you include a green bond from an airport operator? When you buy an ETF you leave these decisions to the index provider. We think these are very important conversations to have with our clients.

It would be wrong to think that green bonds are the only way to gain exposure to virtuous companies. Companies in the business of blood testing or those in the health sector do not necessarily issue green bonds yet their contributions to society are important. Some companies may be ‘green’ but do not issue green bonds, such as this US water technology company we have in the portfolio. We bought the bonds because we were interested in the strategy of the company. Then they issued a green bond. On the other hand, we’ve had the example of an energy company promoting its sustainability credentials, then buying a shale gas company when the US energy market collapsed.

Does ESG change the job of professional investors?

In our team we have always cultivated a long-term mindset. Technological change and regulation are key inputs in our process because they can create new risks and opportunities and trigger a mini credit cycle in a sector. So, when ESG regulation started to come into force, we were not taken by surprise.

We also always have had a very fundamental investment approach of asking ourselves “why is the company making this acquisition/changing its business model by launching new products – does it make sense?” We may be opportunistic from time to time, but our approach is that we lend money to a company; we’re not traders.

We also talk to companies about our concerns. You can challenge company management during the meetings that you have with them, you don’t necessarily need defined engagements. Ultimately, governance is very important. You can’t trust a company on its environmental commitments if it doesn’t have good governance.

It would be wrong to think that green bonds are the only way to gain exposure to virtuous companies

Is the new generation more ESG-conscious?

I am not of the opinion that millenials believe in ESG much more than others. I think that each generation has its own biases and its blind spots. In the time of my grandparents, the harmfulness of tobacco was not taken into account at all. Today’s young people don’t understand the link between their streaming habits and the exponential growth of carbon emissions. Our ancestors saved water, used up all leftovers. Today we are in a much more wasteful society. My children don’t recycle. They have a sincerity about them, but they have blind spots, like all generations!

To read more about investing sustainably at Pictet Asset Management, click here to access the Responsible investment report.

Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to risks and uncertainties that could cause actual results to differ materially from those presented herein.

Important notes

This material is for distribution to professional investors only. However it is not intended for distribution to any person or entity who is a citizen or resident of any locality, state, country or other jurisdiction where such distribution, publication, or use would be contrary to law or regulation.

The information and data presented in this document are not to be considered as an offer or sollicitation to buy, sell or subscribe to any securities or financial instruments or services.

Information used in the preparation of this document is based upon sources believed to be reliable, but no representation or warranty is given as to the accuracy or completeness of those sources. Any opinion, estimate or forecast may be changed at any time without prior warning. Investors should read the prospectus or offering memorandum before investing in any Pictet managed funds. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.

This document has been issued in Switzerland by Pictet Asset Management SA and in the rest of the world by Pictet Asset Management (Europe) SA, and may not be reproduced or distributed, either in part or in full, without their prior authorisation.

For US investors, Shares sold in the United States or to US Persons will only be sold in private placements to accredited investors pursuant to exemptions from SEC registration under the Section 4(2) and Regulation D private placement exemptions under the 1933 Act and qualified clients as defined under the 1940 Act. The Shares of the Pictet funds have not been registered under the 1933 Act and may not, except in transactions which do not violate United States securities laws, be directly or indirectly offered or sold in the United States or to any US Person. The Management Fund Companies of the Pictet Group will not be registered under the 1940 Act.

Pictet Asset Management (USA) Corp (“Pictet AM USA Corp”) is responsible for effecting solicitation in the United States to promote the portfolio management services of Pictet Asset Management Limited (“Pictet AM Ltd”), Pictet Asset Management (Singapore) Pte Ltd (“PAM S”) and Pictet Asset Management SA (“Pictet AM SA”). Pictet AM (USA) Corp is registered as an SEC Investment Adviser and its activities are conducted in full compliance with SEC rules applicable to the marketing of affiliate entities as prescribed in the Adviser Act of 1940 ref.17CFR275.206(4)-3.

Pictet Asset Management Inc. (Pictet AM Inc) is responsible for effecting solicitation in Canada to promote the portfolio management services of Pictet Asset Management Limited (Pictet AM Ltd) and Pictet Asset Management SA (Pictet AM SA).

In Canada Pictet AM Inc is registered as Portfolio Manager authorized to conduct marketing activities on behalf of Pictet AM Ltd and Pictet AM SA

AMCS Group Promotes Álvaro Palenga to Sales Director in Miami

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Captura de Pantalla 2022-02-08 a la(s) 14 — Foto cedidaÁlvaro Palenga, Sales Director de AMCS. Foto cedida

AMCS Group has announced the promotion of Álvaro Palenga, CFA, to Sales Director and his relocation from Montevideo to Miami. He will be reporting to Andrés Munho, Co Founder and Managing Partner.

In a press release, the company has pointed out that Palenga is assuming the role “at an exciting time”, as the business is seeking to significantly grow the market presence of its three asset management partners, AXA Investment Managers, Jupiter Asset Management and Man Group, in the US Non-Resident channel.

In his new role, he will be focused on covering wirehouses, private banks and broker dealers in Miami and Texas, while providing additional support to the New York area market, which is currently serviced by Chris Stapleton, Co-founder and Managing Partner of AMCS.

“We are extremely excited with the promotion and relocation of Álvaro as our Miami-based Sales Director. He has made significant contributions to our business in a short period of time, and we’re confident his consultative, investment-centric approach will be well received by our North American clients”, commented Munho.

Reorganization of the team

The firm has also announced the hire of Santos Ballester Molina as Sales Associate, based in Montevideo. He will support the wider AMCS sales team across the entire Americas region, with a focus on the southern cone client group.

“Having Santos join us in Montevideo at a pivotal time for our business to be able to support the wider team’s efforts represents a key addition to our team, and we’re confident he is up for the task of adding value for our clients across the Americas. We all look forward to both of their contributions to our ambitious growth plans”, said Munho.

Ballester will report to Santiago Sacias, Managing Partner and Head of Southern Cone Sales, who is also based in Montevideo. He joins from Riva Darno Asset Management in Buenos Aires where he has worked since completing his bachelor’s in economics from the University of San Andrés.

As part of this reorganization of the AMCS sales team, Francisco Rubio has left the business “to pursue other opportunities”, the press release says. He leaves “with tremendous gratitude” from the firm for his significant efforts over the years”.

Wirehouse Advisors Increased Their Productivity Over the Past Year Despite Shrinking Headcount

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Captura de Pantalla 2022-02-08 a la(s) 13 — . Pexels

Despite shrinking headcount, the wirehouse channel boasts a more productive advisor base, averaging $198 million per advisor at an increase of 14.4% year-over-year. This compares to an average of $88.1 million across all channels, according to Cerulli Associate’s report U.S. Advisor Metrics 2021: Client Acquisition in the Digital Age.

As wirehouses prioritize productivity, other advisory channels are capturing marketshare. The wirehouse channel, which has now lost 6.2 percentage points in asset marketshare since 2010, is projected to cede an additional 6.5 percentage points of total asset marketshare by year-end 2025.

By 2025, Cerulli projects that 30.6% of the industry’s assets will be managed by advisors in the independent and hybrid registered investment advisor (RIA) channels. The national/regional broker/dealer (B/D) channel (15.2%) is already overtaking the wirehouse channel (14.9%) in headcount marketshare.

The report shows that wirehouses are focused on wealthier clients, technology enhancements, client acquisition, and equipping their advisors with robust specialized support services. “Wirehouses are playing to their strength and providing advisors with the tools they need to capture and grow wealth,” says Marina Shtyrkov, associate director.

As the most productive channel, wirehouses have designed internal resources, fully integrated workstations, and teams that include multiple specialists spanning global capabilities. “Outside of a few niche B/Ds, banks, and highly specialized RIAs and multi-family offices, this scale can be mimicked but rarely matched,” she adds.

Main challenges

Advisors most commonly identify new client acquisition (52%), compliance (40%), and managing technology (30%) as their practice’s primary challenges. Cerulli points out that wirehouses have leveraged their scale to minimize these productivity hurdles for their advisors and tailor the firm’s resources to address the needs of large practices working with affluent clientele.

As a result, mega teams -practices with $500 million or more in AUM- are most pronounced in the wirehouse channel, which accounts for 41% of the industry’s mega teams. “Advisors are frequently held back by competing priorities as they balance the daily needs of their clients and the operational aspects of their businesses. Instead of vying for headcount, wirehouses have concentrated on solving these organic growth challenges”, says Shtyrkov.

Firms looking to increase productivity should focus on winning greater walletshare, advisor teaming, and merger and acquisition opportunities. However, in Cerulli’s view, they cannot lose sight of the capital required to develop infrastructure to support these efforts, as well as to recruit and retain practices working upmarket.

GAM Partners with Liberty Street Advisors in the United States to Invest in Late-Stage Innovation Companies

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CEO GAM — Foto cedidaPeter Sanderson, CEO del Grupo GAM Investments.. GAM se asocia con Liberty Street Advisors en Estados Unidos para invertir en la última fase de firmas tecnológicas a través del private equity

GAM Investments has entered into a strategic partnership with the Liberty Street Advisors team specialized in investing in late stage companies in the United States. Its aim is to provide its clients access to these firms through private equity investments.

In a press release, the asset manager has revealed that they will invest in “leading late-stage privately-owned technology and innovation” companies with high growth potential. The team at Liberty Street is deeply experienced in private markets investing and has an extensive track record investing in this sector.

In partnership with Liberty Street, GAM plans to launch a capability which will leverage the expertise of Liberty Street’s private markets investment team. This capability will give clients the opportunity to gain exposure to a market which has historically been difficult for them to access.

The firm has highlighted that growth equity is a segment of the private equity asset class which sits between venture capital and traditional private equity and “is expanding at unprecedented levels, with disruptive technology-driven growth across multiple sectors and industries“. This growth has led to a proliferation of unicorns, with more than 900 venture capital backed companies currently valued at over USD 1 billion and many more on a similar trajectory.

In this sense, by investing in these types of late stage high-growth, innovation companies the Liberty Street team seeks to participate in their potential appreciation while they are under private ownership.

“We are delighted to partner with Liberty Street to provide our clients with access to leading privately-owned companies. The team at Liberty Street has deep, multi-decade investing experience, as well as established relationships within the venture eco-system, and is an ideal partner for us”, said Peter Sanderson, Group Chief Executive Officer at GAM Investments.

He also pointed out that an increasing number of their clients are seeking to diversify their portfolios by including longer-term private asset investment strategies. “In our view, privately-owned companies in their later-stage nonpublic funding rounds could offer investors strong long-term performance potential, while their historical downside resilience and lower volatility compared to public equities also make this asset class attractive for portfolio diversification”, he added.

Meanwhile, Kevin Moss, Managing Director at Liberty Street, commented that they are seeing companies stay private for longer, driven primarily by regulatory changes, ease of business model development in the private sphere and a larger pool of available private capital. “A significant portion of these companies’ value appreciation occurs prior to entry into the public markets, at mid or large cap size. We believe that late-stage, private growth companies can present an attractive balance of risk and return for investors, compared to early-stage venture investments and public equities”, he concluded.

Seven Megatrend Themes To Watch

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Megatrends are the powerful socio-economic, environmental and technological forces that shape our planet. The digitisation of the economy, the rapid expansion of cities and the depletion of the Earth’s natural resources are just some of the structural trends transforming the way countries are governed, companies are run and people live their lives. Pictet Asset Management explains about seven key themes across science, technology and sustainability which are helping shape our future over the coming year – and beyond

1. Focus on food security

The recent supply chain disruptions – and the resulting empty supermarket shelves – have put the spotlight on food security. Advanced agricultural technology and improved logistics are key to successfully feeding an ever-growing global population in a context of climate change.

For a start, there is an onus on producing more food locally, which has multiple benefits of more reliable supply, reduced waste and carbon footprint and improved traceability. It also reduces pressure on shrinking resources, such as freshwater supply and arable land. Indoor, vertical farms are a big growth area, offering the prospect of quality local food to areas where there is little space or challenging climate conditions. Vertical farming company Kalera, for example, is set to launch a new mega farm in Singapore this year, aiming to grow some 500,000 kg of leafy greens per annum as part of the island nation’s plans to provide for 30 per cent of its nutritional needs by 2030 (up from around 10 per cent currently).

Traditional farms are also embracing latest scientific advances, which have given us the power to tailor crops to the environment and to improve nutritional values. The use of blockchain, meanwhile, can help boost crop yields and streamline supply chains – as well as increasing transparency over where our food comes from. French retail giant Carrefour is one of the pioneers here, and aims to widen the use of blockchain to some 300 fresh products this year, tracking and tracing their travel from farms to stores.

There is also increased appetite for direct-to-consumer food services, and indeed almost any new generation food production and logistics model, which can shorten the complex global supply chains and reduce the risk of logistics issues, spoilage and contamination.

There is an onus on producing more food locally, which has multiple benefits of more reliable supply, reduced waste and carbon footprint and improved traceability.

2. Wood, re-imagined

Wood was one of the first materials mastered by mankind – it’s been used in construction for more than 10,000 years. Today, it’s getting a new lease of life thanks to its sustainability credentials. Local government in Paris, for example, has mandated that any buildings lower than eight stories built for the 2024 Olympics must be made entirely from timber. France as a whole, meanwhile, plans to mandate that from this year, all public buildings are made of at least 50 per cent timber or other natural materials. EU’s “Green Deal” and other sustainability-focused Covid recovery initiatives are likely to accelerate the shift; carbon taxes, meanwhile, may make timber more affordable.

Wood already has a lot to recommend it. It is a fire-safe material, which can be used to offer fire resistance of up to two hours. It also chars and burns at a slow and even pace, in contrast to some metals – such as steel – which can melt in a rapid and unpredictable manner once it reaches critical temperature, potentially leading to sudden structural collapses.

Technology, meanwhile, is improving on nature. Whereas building in wood was formerly confined to single family homes or small multi-family buildings, mid-rise and even high-rise buildings can now be almost entirely built from wood, using cross-laminated timber (CLT) – a wood panel material made by gluing together boards cut from a single log. Stable and strong, CLT is used for the pre-fabrication of massive wooden floors, and other structures that can be assembled much faster at the construction site, reducing costs, emissions, and as wood is lighter but has the same strength capabilities as other construction materials, but with a much lower impact on the environment.

The market for CLT is expected to expand to USD 2.3 billion globally by 2025, from USD 670 million in 2016 (1).

And wood’s potential is not limited to construction – it can also be used in packaging, textiles, food ingredients and hygiene products. Finally, besides its use as a material, wood is vital for carbon storage – a characteristic that is becoming increasingly valuable.

3. Battery boom

The world is shifting towards more sustainable sources of energy and power. That, in turn, means that we need more and more batteries for everything from powering electric vehicles to storing renewable electricity.

Electric vehicle penetration is forecast to reach 50 per cent globally (and as high as 79 per cent in Europe) by 2030(2). This many cars would require around 4,000 GWH of lithium batteries – 25 times more than needed today (3).

The large-scale battery storage market, meanwhile, is expected to increase 20-fold by 2030 according to a new analysis by Blomberg New Energy Finance. This is necessary to smooth out electricity production from a growing number of wind and solar plants around the world, whose expansion is in turn fuelled by ambitious climate commitments and supportive government policies in countries including US, China, India, Australia, Germany, UK and Japan.

Batteries are also needed to support a growing market for rooftop solar and storage solutions for residential and commercial properties.

With such strong expected demand, technology is focused on making batteries smaller, lighter and less expensive – as well as exploring the possibility of moving away form lithium to other materials, including magnesium or even oxygen. Such research could get fresh momentum over the coming year due to increased lithium prices.

4. Cyber risks

The pandemic has triggered a deeper review of working practices around the world, with many shifting to working remotely at least some of the time. That presents opportunities in the digital world, not least through increased investment in cloud services and the resulting need for every more data centres. However it also creates its own challenges – not least for cyber security.

As the migration to the cloud computing architecture accelerates, more and more businesses will adopt zero-trust security architectures to control user access to cloud servers. Over the coming year, there will be growth in the use of two-factor authentication and biometrics. VPNs, meanwhile, are likely to be phased out as cyber attacks expose their vulnerability. Industry analysts are also increasingly concerned about the growth of so-called “deepfakes”, which, with the power of machine learning can simulate bosses or work colleagues on video or audio calls.

5. Life in the metaverse

Spatial computing already brings us virtual home assistants and ride-hailing apps. It lets gamers summon ghouls into their living rooms, and shoppers try on clothes in digital changing rooms. Next, imagine working, shopping and socialising as avatars, in a rich, three-dimensional digital world that overlays our own. Welcome to the metaverse – a shared virtual environment where the physical and digital worlds coalesce across virtual and augmented reality (VR and AR), providing a sense of immediacy and immersion.

For years, clunky headsets, poor connectivity and a lack of decent content held back the rise of these technologies. Advances in 5G mobile broadband and smartphones are changing that. At the same time, the pandemic has made the public more open to online interaction. The concept is gaining particularly strong traction among GenZ – the generation born from late 1990s to early 2010s, which now represents a third of the global population.

Big tech companies are taking note. Microsoft has just unveiled plans to acquire Activation Blizzard, the maker of “Call of Duty” games, saying this will “play a key role in the development of metaverse platforms” , while Facebook’s parent company has rebranded as “Meta”. The global metaverse market could grow to around USD800 billion by the mid-2020s, according to Bloomberg research. That will involved hardware (such as VR glasses), software (for shopping, socialising, education and work), cloud capacity and infrastructure (better networks, with increased bandwidth and reduced latency).

6. Diagnosis, please

Diagnostics has also taken centre stage in the wake of the Covid-19 pandemic. Losing your sense of smell and taste were quickly identified as key signposts of the virus. Crucially, though, that insight did not come from doctors, epidemiologists or lab researchers. It came from computers, which collected and crunched data from millions of people via the ZOE app.

And that’s only the tip of the iceberg. The potential of AI in diagnostics goes far beyond pandemics. After looking at thousands of scans, machines have learned to identify breast cancer with accuracy comparable to that of experienced human radiologists. Such techniques could also open up the possibility of diagnosis in places where there are few or no doctors – particularly in remote locations and in developing countries.

This is crucial, as early diagnosis means that treatment can be started sooner, improving the patients’ prospects and reducing the risk of the disease spreading. Governments, faced with ageing populations and tight budgets, are increasingly seeing these benefits and investing accordingly. The UK, for example, has allocated GBP 248 million to the NHS public health service this year to invest in technology for diagnostic tests, checks and scans.

7. PFAS pollution

PFAS – a “magical” manufactured chemical is used in an array of household items and industrial products, from non-stick coated frying pans, microwave popcorn bags and dental floss, to stain- and water-resistant fabric, firefighting foams and wastewater treatment systems. Its popularity is due in part to its durability. But that is also its biggest flaw – and one to which an increasingly environmentally-sensitive world is waking up. PFAS never breaks down.

Governments are starting to crack down on the chemical. The onus will be on clearing up existing pollution (which can be done, for example, with activated carbon) as well as on developing greener alternatives to PFAS. The latter is particularly urgent in the EU, where around 200 PFAS will be banned starting form next year – regulation that manufacturers will have to be ready for. In the food packaging industry, for example, experiments are currently underway with bamboo, palm leaf and clay coatings.

Opinion written by Hans Peter Portner, Head of the Thematic Equities team and a Senior Investment Manager at Pictet Asset Management.

Discover more about Pictet Asset Management’s expertise in thematic investing.

Notes:

(1) Transparency Market Research

(2) UBS Q-Series, “EVs shifting into overdrive” (March 2021)

(3) Bloomberg New Energy Finance

Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to risks and uncertainties that could cause actual results to differ materially from those presented herein.

Important notes

This material is for distribution to professional investors only. However it is not intended for distribution to any person or entity who is a citizen or resident of any locality, state, country or other jurisdiction where such distribution, publication, or use would be contrary to law or regulation.

The information and data presented in this document are not to be considered as an offer or sollicitation to buy, sell or subscribe to any securities or financial instruments or services.

Information used in the preparation of this document is based upon sources believed to be reliable, but no representation or warranty is given as to the accuracy or completeness of those sources. Any opinion, estimate or forecast may be changed at any time without prior warning. Investors should read the prospectus or offering memorandum before investing in any Pictet managed funds. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.

This document has been issued in Switzerland by Pictet Asset Management SA and in the rest of the world by Pictet Asset Management (Europe) SA, and may not be reproduced or distributed, either in part or in full, without their prior authorisation.

For US investors, Shares sold in the United States or to US Persons will only be sold in private placements to accredited investors pursuant to exemptions from SEC registration under the Section 4(2) and Regulation D private placement exemptions under the 1933 Act and qualified clients as defined under the 1940 Act. The Shares of the Pictet funds have not been registered under the 1933 Act and may not, except in transactions which do not violate United States securities laws, be directly or indirectly offered or sold in the United States or to any US Person. The Management Fund Companies of the Pictet Group will not be registered under the 1940 Act.

Pictet Asset Management (USA) Corp (“Pictet AM USA Corp”) is responsible for effecting solicitation in the United States to promote the portfolio management services of Pictet Asset Management Limited (“Pictet AM Ltd”), Pictet Asset Management (Singapore) Pte Ltd (“PAM S”) and Pictet Asset Management SA (“Pictet AM SA”). Pictet AM (USA) Corp is registered as an SEC Investment Adviser and its activities are conducted in full compliance with SEC rules applicable to the marketing of affiliate entities as prescribed in the Adviser Act of 1940 ref.17CFR275.206(4)-3.

Pictet Asset Management Inc. (Pictet AM Inc) is responsible for effecting solicitation in Canada to promote the portfolio management services of Pictet Asset Management Limited (Pictet AM Ltd) and Pictet Asset Management SA (Pictet AM SA).

In Canada Pictet AM Inc is registered as Portfolio Manager authorized to conduct marketing activities on behalf of Pictet AM Ltd and Pictet AM SA.

Pictet Asset Management: Buying the Dip

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It’s been a gloomy start to the new year. Economic growth has disappointed, Covid cases have spiked and stocks and bonds have sold off sharply. But we believe the world economy and equity markets might be through the worst – at least for the short term.

Following January’s rout, we believe that global equities can return around 15 per cent by year-end, thanks largely to a 13 per cent rise in corporate earnings and a steady trickle of dividends. Global bonds, meanwhile, look likely to deliver capital losses.

Taking advantage of attractive valuations, we have chosen to upgrade equities to overweight. This is a tactical move, conditional on the speed of US monetary tightening and on a successful resolution of the crisis in Ukraine. Reassuringly, our multi-asset risk appetite indicator – which measures the extent to which the market has been rewarding or penalising historical volatility – remains in positive territory, in contrast to past market corrections.

Even though recent economic data has been mixed at best, our business cycle indicators suggest the recovery remains intact. Although have reduced our forecast for global growth in 2022 to 4.4 per cent from 4.8 per cent, that projection is still above the 4.2 per cent consensus estimate. (1)

The negative impact from the Omicron Covid variant should largely be contained to the first quarter of this year and we continue to believe that a return to more normal economic conditions should be the theme for this year – service sectors should reopen and recover to pre-pandemic levels of activity, supply chain constraints should ease and, crucially, price pressures should peak early in the year.

In the US, we expect inflation to crest in March, which should offer some reassurance to financial assets by reducing the risk of excessive tightening from the US Federal Reserve. Delivery times are shortening and purchasing manager surveys are pointing in the direction of disinflation.

Elsewhere, we see more grounds for optimism in China, where a broad-based recovery is now evident across all sectors. While our leading indicator is still in negative territory, momentum has improved. The reacceleration in fixed asset investment is particularly strong, especially in manufacturing, and infrastructure spending is picking up as well. Credit conditions are improving, too, and policymakers remain willing to respond to growth concerns.

While markets are discounting the prospect of sharp tightening of monetary policy worldwide, our liquidity indicators paint a more balanced picture.

Clearly, our readings have felt the impact of the Fed, which has turned incrementally more hawkish; one FOMC member suggested the central bank could hike rates by 50 basis points in March. The market has already priced in more than four rate hikes for the year. However, there remains uncertainty around the timing, pace and data dependency of quantitative tightening and indeed around the impact it will have on assets.

We are looking at a potential ‘quadruple tightening’ in the US: an exit from quantitative easing (QE), rate hikes, the start of (QT) and real tightening as inflation recedes. Our liquidity models suggest that the cumulative effect of these moves may result in a 4.5-5 percentage point increase in the US “shadow” real policy rate – which is adjusted for QE and QT policy moves – this year alone (3). To put that in context, the tightening in 2014-19 was 6 percentage points.

But that tightening is offset by easier conditions elsewhere.

In the private sector, for example, the flow of credit is accelerating and has now reached 10.2 per cent of GDP on a global basis (2).

Furthermore, even as some central banks are tightening policy, China continues to move firmly in the other direction. Since December, Chinese authorities have announced a 50 basis point cut in the reserve requirement ratio (RRR), a reduction in lending rates for small and medium-sized enterprises and rural loans and, crucially, a 10 basis point cut in policy rates and a cut in loan reference rates. The rhetoric from various policymakers appears synchronised, pointing towards further easing.

We will be watching closely, potentially on standby to return to a more cautious stance on equities later in the year if needed. For now, though, global liquidity conditions are broadly neutral for risk assets.

Our valuation indicators show that equities as a whole look relatively attractive, exhibiting the best valuation score on our scorecard since March and trading close to fair value. Given the approximate 20 per cent decline in MSCI ACWI’s price-earnings ratios since September 2020 (from 20.7 to 16.7 the pre-pandemic level) our models now suggest no further contraction in earnings multiples till year-end.

Among sectors, materials and healthcare stocks look particularly attractively valued and even tech is no longer excessively expensive. Chinese equities are well positioned to make up for some of the steep underperformance seen in 2021. China is currently one of the cheapest equity regions, according to our models.

Valuation scores have also improved across fixed income, too.

Technical indicators show poor seasonality trends for bonds; bond funds have seen only muted inflows since the start of the year. In contrast, equity funds have seen inflows of some USD67 billion, despite the recent sell-off. Notably, flows into Chinese stocks have accelerated, chiming in with our more positive stance on its stock market.

Opinion written by Luca Paolini, Pictet Asset Management’s Chief Strategist.

Discover Pictet Asset Management’s macro and asset allocation views.

Notes:

(1) Bloomberg consensus forecast for 2022, as of 22.01.2022.

(2) Private liquidity flow calculated as bank & non-bank net credit creation over preceding 6 months, as % of nominal GDP, using current-USD GDP weights.

(3) Real policy rate calculations use Wu-Xia Shadow Rate (2016) methodology for QE/QT adjustment.