Good opportunities are currently to be found especially on global equity markets and in bonds from PIGS and emerging market countries. Sal. Oppenheim’s experts expect to see the DAX 30 at 8,200 points over the next year, the yield on 10-year German government bonds at 1.75% and the euro exchange rate at US$ 1.20.
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The short-term outlook should not disguise the current risks, however. The largest source of risk is the euro crisis, which in reality consists of a banking crisis, excessive govern-ment debt and a slump in the real economy. According to Moryson, it is primarily thanks to expansive monetary policy that the financial markets are not responding to the current risks with greater volatility. "When markets are dependent on monetary policy in this way, investors need to be ready for withdrawal," Moryson continued.
Longer term, a new environment is emerging in which investors will need to reconsider the overall focus of their portfolios. This new market environment features weaker growth and thus smaller gains on the stock markets, as well as low long-term real yields on the bond market. In addition, there is a latent risk of rising prices in the long term and of greater volatility on the financial markets due to the high political and economic uncertainty.
Dr Lars Edler, head of investment strategy at Sal. Oppenheim, describes some strategic measures with which investors can improve the risk-return ratio of their total investments in the new environment, as well as some promising tactical positioning:
1. stronger diversification of investments, achieved both within asset classes and through higher investment in emerging markets and alternative asset classes.
2. stronger inclusion of real assets such as real estate, infrastructure and inflation-indexed bonds.
3. stronger focus on market-neutral active management and less emphasis on market indices.
In recent years, Sal. Oppenheim’s investment strategists have focused more on market-neutral investment strategies and successfully implemented these in investment funds such as SOP Aktien Marktneutral (unit class R, ISIN: DE000A1JBZ51).
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By GlobalDataMoryson has been Chief Economist at Sal. Oppenheim since November 2012. As an expert in econometrics he has around 20 years of experience in analysing and evaluating macroeconomic developments and advising institutional investors.
As head of Sal. Oppenheim’s investment strategy, Dr Lars Edler is responsible for the asset allocation of the entire bank (institutional funds and private assets), managing balanced mandates and multi-asset funds and the development of models based on in-house investment processes.
