The managers’ barometer indicates time for recovery

The main threat comes from the rush that has characterized almost all asset classes over the last year, leading to tight prices. Despite the diversity of views, the common trait among the managers present at the eleventh edition of ConsulenTia – the annual event for financial advisors organized in Rome byAnasf – is the belief that the next few months will not be characterized by generalized increases, but rather by a recovery of the stocks that have lagged behind in recent months.

“On a general level, 2024 does not hold any particular innovations: growth is stable in the United States, there are signs of an end to the slowdown in the Eurozone and continuation of expansion in China. All this while inflation slows down, towards of the central banks’ objectives, although not at the pace that characterized the second half of 2023”, he reports Andrea Contihead of macro research at Eurizon. Given the scenario, the expert estimates that the Fed and the ECB will begin to cut rates between June and July “to avoid excessive monetary restriction that could weigh on economic activity”.

It remains to be understood how much of this prospect is already discounted in the prices of financial assets. “The underlying context remains positive, thanks above all to the stability of the labor market,” he recalls Manuel Pozziinvestment director of M&G Italy. “With the Treasury (US government bond, ed.) yielding 4.3% in the ten-year maturity, in the face of inflation around 3%, low-risk bonds remain an interesting investment option”. Having said this, Pozzi recalls the importance of diversification with corporate issues, especially in market areas where there remains an excess return compared to historical averages such as financials. “The situation of high rates it has allowed banks to significantly improve their balance sheets, so the risks of default are particularly limited”, underlines Pozzi. If this is M&G’s strategic view, for the short term the preference goes to variable rate issues, compared to a 4% Euribor, one and a half points higher than the Bund. “The two values ​​should eventually align, so we see greater room for revaluation in the first direction,” adds Pozzi.

He sees good prospects forEuropean bondswith a good degree of diversification which also includes government bonds, Scott DiMaggioco-manager of AB European Income Portfolio. “The balanced approach by type of issuer and risk profile of individual issues allows the portfolio to be varied based on market evolution,” he recalls. “Overall, we believe that there is value in European corporate bonds both in the investment grade branch and in the high yield branch (how the less risky issues and those of less solid issuers are classified respectively, which affects the rates guaranteed to investors, ed.), underlining however the need to prefer higher quality issuers. This is why we focus on the BBB and BB bands with respect to issuers with lower ratings.”

Then he adds: “We believe that the sectors with the best risk-return profile at this time are the large financial groupstogether with energy sector – always keeping in mind the theme of energy transition – and to thator technological. Looking at the yield curve, our preference falls in the intermediate range, on five and ten year maturities.”

Preferences are also concentrated on fixed income Andrea Remartini, head of distribution relations Italy by Candriam. “Government bond yields are attractive, but we must never lose sight of the importance of diversification. At the moment we prefer double BB high yield issues, essentially those placed immediately below the investment grade rating. These are of solutions that offer returns of around 6% for a duration of no more than three years”. This compares to BTp with the same duration which do not go beyond 3.7%. “So far the general analysis, but today more than usual, passive management is fundamental, allowing you to move the portfolio in the face of a constantly evolving scenario. This is unlike active management, which leads to taking on alongside systemic risks, also those specific to individual securities”. , Candriam excludes bank issues from corporate bond funds, as they are more exposed to monetary policy choices, and focuses on hedging of exchange rate risk. “An approach that allows you to maintain a limited relationship between risk assumed and expected return,” adds Remartini. “In particular we focus on non-cyclical sectors such as healthcare and telecommunications, always with a global geographical approach”.