Major Swiss private banks however have kept faith in bonds. UBS for instance in July addressed the concern about the outlook for bonds, but investment boss Mark Haefele has remained an admirer of bonds with good ratings and high-yield securities in the U.S., dollar-denominated government bonds from emerging markets, European crossover bonds (securities with a BBB to BB rating), green investments and Asian high-yield bonds.
As late as in July, rival Credit Suisse held 34 percent of assets in its balanced-franc-portfolios in bonds.
Julius Baer has 40 percent bonds in a balanced-euro-mandate. Lombard Odier in turn is happy with crossover-securities, as it put it in a recent comment.
Exceptionally Important
What all these major players omit from mentioning: if you are to invest hundreds of billions in client assets, the $100 trillion business simply can't be ignored.
The Swiss financial market historically has put a high emphasis on maintaining the value of client assets and therefore bonds have played an important role. Pension funds to this day have minimum limits on bonds in their portfolios which their investment officers are meant to adhere to.
The Worth of Being Creative
But, the step taken by Baumann & Cie shows in an exemplary fashion how things have started to change. At boutiques like Bellerive, bonds have gone out of favor some time ago.
The company is investing client assets in equities alone, adding a degree of volatility derivatives as a way to stabilize the portfolio. Such creativity will become more prevalent in times to come if yields remain so low as to render bonds unattractive.
- << Back
- Page 2 of 2
