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Banca March publishes ten top tips for good investment and savings decisions

03 August 2021 Category: General

  • Against a backdrop of low interest rates, Covid-19 led Banca March to step up the alternative asset investment solutions it has been offering since 2018, with a view to complementing its range of products with innovative ideas that seek returns from alternative sources to traditional assets.
  • In a scenario where planning and quality professional advice are crucial, Banca March has drawn up a list of recommendations to help investors make successful investment decisions.
  • Assets under management by Banca March through Discretionary Portfolio Management were up 71.5% year on year at the end of June, totalling €1.72 billion, and investment in alternative assets increased by 140%.

Since 2018, Banca March has been conscious of a changing investment landscape which needed to be analysed differently and required innovative solutions seeking returns from alternative sources to traditional assets. Not only does the devastating economic and social impact of the Covid-19 pandemic support this approach, it has also increased the pace at which the markets and investors have embraced these new solutions.

From an economic perspective, the key characteristic has been minimal long-term growth rates coupled with low interest rates and negative real rates, i.e., stripping out the effect of inflation, which is swiftly returning to normal. We also live in a world which is increasingly aware of the social and environmental impact of our choices, and regulators and investors alike are also demanding this social and environmental awareness from investment managers.

Increasingly, customers are investing the way they live; they operate remotely, they appreciate personal contact where it adds value, and they incorporate this enhanced social and environmental awareness into their financial decisions. This new scenario makes planning and professional advisory services, as offered by Banca March, more important than ever before. With this in mind, the bank has created a list of 10 top tips and guiding principles which, based on its own extensive experience, will help investors successfully navigate decisions as to where to put their money.

Ten tips for successful investment decisions:

  1. Liquidity comes at a price. Cut liquidity to the minimum required. It is currently suffering two-fold due to negative rates and rising inflation and this is not set to change.
  2. Seek support from qualified financial advisors. MiFID II afforded countless benefits for investors, increasing transparency, removing conflicts of interest and requiring financial advisors to hold certified qualifications.
  3. Delegate more tactical decisions to professionals. Only professional asset managers were thinking about where to invest funds in mid-March 2020 and had the resources to harness the potential of the crisis
  4. Diversify portfolios as much as possible. It is not about the number of products you invest in, it is about investing in truly different assets, which means investing across different strategies and markets.
  5. Active management. The markets react very quickly to changes and expected changes. We are seeing aggressive region, sector and even style rotation processes which require constant portfolio adaptation.
  6. Invest for the long term and plan appropriately for the use of immediate liquidity. There are very long-term investments available for savings that do not need to be immediately accessible, which pay a premium in exchange for temporary illiquidity.
  7. Invest in so-called private markets. Private equity, unlisted debt, infrastructure and real estate, rather than assets offering immediate liquidity, will improve diversification, discourage rash decisions and thereby improve risk/return ratios.
  8. Do well, and do good. Integrating research on non-financial factors into decision-making processes, such as social and environmental indicators, has no negative impact on returns and even helps mitigate certain risks.
  9. Incorporate alternative strategies, not traditional ones. These strategies afford asymmetrical returns; they are less exposed to the flow of the markets and more dependent on manager expertise to harness divergences between the performance of different assets, regions, sectors and styles.
  10. Use leveraging with caution. In a scenario of negative real rates, this can be a compelling way to increase returns, but with certain limits in place that will not constrain investment at the worst possible time.

Assets under management by Banca March through Discretionary Portfolio Management (DPM) were up 71.5% year on year at the end of June, totalling €1.72 billion. The increase in customer numbers was steeper still - Banca March closed the first half of 2021 with 5,200 contracts, up 81.5% year on year. These services were launched in 2018 to provide customers with a selection of open-architecture products that are actively managed to obtain yields in any market context.

Likewise, investment in Banca March's alternative asset solutions was up by 140% in the first half of the year versus H1 2020, totalling over €300 million under management. The bank added these solutions to its range of products in 2019 through partnerships with K2 Advisors-Franklin Templeton (DPM) and Banque Syz (fund of funds). The latest addition to these alternative solutions was the March Alternative Strategies fund of funds, which affords conservative investors access to a diversified portfolio of vehicles specialising in Long Short Equity, Global Macro, Credit/Relative Value and Event Driven strategies. This strategy had generated total assets under management of €80 million at the end of June.

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