The crisis strategy of the professionals.
The members of the Lerbach Competence Group initiated by private wealth and Robeco are responsible for the investment strategy of 40 family offices, private banks and asset management companies. This is how the professionals position themselves on the stock markets after the rollercoaster ride.
We asked the professionals what a balanced portfolio of liquid asset classes of an average investor willing to take risks should look like in the long term. And how they would currently run such a portfolio.
The difference shows where the professionals are currently overweight and underweight:
Long-term strategic Current overweighting BreakdownBreakdown Underweighting
Shares 457 %- 8 percentage points
Bonds 29 ' %- 2 percentage points
Gold 6 %7 % 1 percentage point
Cash desk12 % 8 percentage points
Other 8% Other 9 % 1 percentage point
What is striking is that the experts are still very defensively positioned. Clear evidence of this is the currently very high level of cash. The significantly increased share of cash in the long-term, strategic asset allocation - 12 percent - is also an indication that the experts will remain more cautious beyond the acute crisis. It is too unclear how the extreme rescue packages and the massive increase in government debt will affect the economy and capital markets.
Part of the cash - to get back towards the strategic split - would be invested by the experts, if:
- a turnaround in the daily incidence of new cases worldwide is discernible and the death figures are declining globally
- a vaccine or an effective drug is found
- there is a second down cycle in the equity markets. The marks at which investments would be made regardless of new information are 8000 points in the DAX and 2100 points in the US stock index S&P 500.
At the same time, the professionals point out that they would be even more sceptical if there were any signs that
- the global economic shutdown lasts longer than April
- the recession becomes a financial and banking crisis
- there is a second wave of infections in China.
Around 60 percent of those surveyed are not planning any significant changes to their strategic positioning for the period after the crisis. Some of the participants are thinking about adding more gold and more inflation-indexed bonds to their portfolios in the future and fundamentally reducing the credit risks.
We will be discussing other important issues with the Lerbach-based competence group in the coming weeks. Among them:
- The states incur massive debts. What does this mean for the world economy
- The banknote beacons provide extremely high liquidity. Is inflation coming after the acute crisis?
- Controversy over corona bonds - is the next euro crisis imminent?
- Is a phase of de-globalization and de-capitalism with more regulation and more state following? What would this mean for the economy and corporate profits?
- How should the strategy of asset protection - long-term protection of assets - be adjusted?
- Crises often drive innovation. Will the corona recession be followed by an economic boom?
You will find answers to these and other questions concerning the investment of your assets here in the next few days.