Credit Suisse Group AG and UBS Group AG have a message for their wealthy clients: it’s not too late to buy equities.
Political risk is keeping many rich individuals on the sidelines of a rally that’s sent global stocks surging to records amid a recovering world economy. Now’s the time for them to jump back in and take advantage of the gains still to be made, say the people looking after their cash.
“Whenever it feels really difficult and challenging to put money at work, ultimately those are often the better investments,” Burkhard Varnholt, deputy chief investment officer of Credit Suisse, said at a roundtable discussion at Bloomberg’s Zurich office on Feb. 27. “That sense of skepticism, that wall of worry, which is still there, to me is not a discouragement.”
The question wealth-management clients have to ask is whether the risks are sufficiently perilous to warrant staying out of stocks when the return of inflation and Wednesday’s Federal Reserve interest-rate increase signal a recovery.
“We can get very fuzzed about political risks these days because it occupies the headlines,” Urban Angehrn, CIO at Zurich Insurance Group AG, Switzerland’s biggest insurer, said at the Bloomberg event. “Underneath that, we have a pretty benign macro environment that shows a recovery, good consumer and business confidence. There are a lot of other positive economic trends.”
Rich individuals who have kept out of stocks have missed out, though, and doubts are emerging as to how much upside is left. Goldman Sachs Group Inc. strategists cut their three-month outlook for the asset class to neutral this week, while Allianz Global Investors equities CIO Lucy MacDonald told Bloomberg TV on Tuesday that valuations are becoming stretched.
“Political uncertainty is always difficult to price,” said Guido Fuerer, CIO of Swiss Re, who oversees assets of about $160 billion. “Going beyond politics and thinking about policy uncertainty more broadly, I see the Fed’s normalization path as very positive, not only for market stability but also for us as long-term investors.”
Bloomberg
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.