Market Talk: Recent Episodes
NN Investment Partners
Our investment experts tackle ongoing developments and the pressing issues of the day. Tune in to find out what's happening in the world and what it could mean for your portfolio.
This podcast is for professional investors only.
After a strong month for bond investors, we asked our LinkedIn audience whether now is the right time to start adding bonds back to your portfolio. Yes, said 63% of the respondents. But Senior Investment Strategist Fouad Mehadi still sees risk for more volatility in the short term. Have the markets become too optimistic? In our latest podcast, Fouad joins Ewout van Schaick, NN IP’s Head of Multi Asset, to discuss the risks and opportunities for bond investors.
Investors applying environmental, social and governance criteria are increasingly faced with incomplete datasets, which limits their ability to make effective investment decisions. Advanced data science solutions can play a crucial role in tackling this issue, says NN IP’s Head of Innovation & Research Sebastiaan Reinders. In our latest Market Talk podcast, he takes us behind the scenes of what NN IP is doing to provide investment teams with the ESG data they need.
Rising inflation coupled with recession fears: are we entering a perfect storm for Dutch residential mortgage investors? No, says Bart Bakx, NN IP’s head of ABS & Mortgages. In this episode of Market Talk, he explains why this asset class might even be more attractive than a year ago.
Are we approaching the bottom in the equity markets? No, says Multi Asset Strategist Aviral Utkarsh. In this episode of Market Talk, he joins Ewout van Schaick, Head of Multi Asset, to explore how investors can navigate this market environment. They also discuss what we can learn from previous bear markets, how rising yields might impact a rebound in stocks and what needs to happen for equities to hit the bottom.
Does the increased carry provide opportunity for European high yield bonds, despite rising rates and economic uncertainty? In this episode of Market Talk, Sjors Haverkamp, Co-Lead Portfolio Manager Global and European High Yield, joins NN IP’s Head of Multi Asset Ewout van Schaick to discuss the attractions and risks of this asset class.
After last week’s gathering in Jackson Hole, it’s clear that the markets should not expect a dovish turn from the Fed and the ECB anytime soon. In our latest Market Talk podcast, NN IP’s Senior Economist Willem Verhagen joins Ewout van Schaick, head of Multi Asset, to discuss the economic outlook and the way forward for central banks.
One of the fastest-growing segments of the fixed income market is social bonds, whose issuance has increased tenfold in the past two years alone. This surge was mainly because of new bonds that provide support for businesses and consumers in the wake of the Covid-19 pandemic.
US stocks will outperform European equities in the second half of 2022, according to three-fourths of the respondents in our poll on LinkedIn last week. But Maarten Geerdink, NN IP’s head of European equities, isn’t convinced. “There are a couple of things that are benefiting European equities.” In our latest podcast, Geerdink joins Patrick Moonen, our Principal Strategist Multi-Asset, to discuss the outlook for European equities.
As sustainable finance graduated from the periphery to the core, the market became a lot more competitive, says John Goldstein, head of the Sustainable Finance Group at Goldman Sachs.
Does the recent rise in yields mark the end of a three-decade bull run in bonds? In our latest podcast, we hear from Sylvain de Ruijter, NN IP’s head of fixed income rates, who joins Ewout van Schaick, head of Multi Asset, to discuss previous bull and bear markets and the way forward for bonds.
In this special episode, our CIO Valentijn van Nieuwenhuijzen sits down with David Solomon, Chairman and CEO of Goldman Sachs. Their conversation covers a range of topics, from the state of the global economy and the investment industry to the background of Goldman Sachs’ acquisition of NN Investment Partners and the growing importance of sustainable investing. Solomon also shares his views on the global economic outlook and the differences in recession risks between Europe and the US.
A week ago, the S&P 500 was on the brink of a bear market. But then equities bounced back to record their best week since November 2020. So are we out of the woods, or will we go back to bear market territory? In our latest podcast, NN IP’s head of European equities Maarten Geerdink joins Ewout van Schaick, head of Multi Asset, to explore what lies ahead for equities.
What’s the most important driver of investors’ decisions? Is it rational thinking or gut feeling? Researchers at Rotterdam School of Management and NN Investment Partners explored this fascinating question in their recent study, “Affective brain activity relates to future stock market performance”.
As global bond markets continue to sell off, where can investors find shelter? Ewout van Schaick, NN IP’s head of Multi Asset, talks about inflation, the extreme volatility in bond markets and why equities might be the only place to hide right now.
Sustainability investing has tended to focus on the environmental side – the E in ESG. But as the pandemic exacerbated the social inequalities in our societies, investors seem to be putting more and more emphasis on the S, the social side of things. Will this trend continue and, if so, how can investors benefit?
Will energy supply concerns over the war in Ukraine slow down the renewable energy transition? No, said 65% of the respondents in a recent poll that we posted on LinkedIn. Oskar Tijs, senior portfolio manager sustainable equity at NN IP, is firmly on their side. In our latest podcast, he joins Ewout van Schaick, NN IP’s head of multi asset, to explain why the war might actually hasten the transition to renewables.
The war in Ukraine has left many people feeling powerless. Last week, NN Investment Partners stopped new investments in Russian and Belarussian securities. What else can investors do? In our latest podcast, Adrie Heinsbroek, NN IP’s Chief Sustainability Officer, discusses the role and responsibility of investors and how they can put their capital to work for positive change amid this humanitarian crisis.
The full-scale Russian invasion of Ukraine has roiled the global financial markets. In this episode, Senior Economist Willem Verhagen joins Ewout van Schaick, NN IP’s head of Multi Asset, to explore what the conflict means for the European economy and monetary policy.
Value stocks have clearly been outperforming growth shares in the past few months. Will this continue, or are we set for another false dawn for value investing? In our latest podcast, Nicolas Simar, Senior Portfolio Manager Euro & European High Dividend at NN Investment Partners, shares his views and explores the biggest opportunities for investors.
The markets are having a rocky start to the year, beset by fears about inflation and interest rates. In our latest podcast, Ewout van Schaick, NN IP’s head of Multi Asset, and Niels Bodenheim, head of Alternative Credit, explore how alternative credit can help investors navigate the current volatility.
Is inflation transitory or here to stay? Ewout van Schaick, NN IP’s head of Multi Asset, still believes inflation will return to pre-pandemic levels by the end of 2022. Robert Davis, senior portfolio manager European equities, doesn’t agree. In our final podcast of the year, Van Schaick debates Davis on this hotly contested topic.
After a difficult year for emerging market assets, 2022 could provide another challenging ride. The expected Fed rate hikes bring back memories of the taper tantrum in 2013, when emerging economies suffered from stretched current accounts and over-reliance on foreign investors. In our latest podcast, Marcin Adamczyk, head of emerging market debt (EMD) at NN Investment Partners, explains why this time might be different.
European or US stocks? In this episode of Market Talk, Ewout van Schaick, head of Multi Asset, discusses recent market developments and his outlook for equities. He is joined by Patrick Moonen, Principal Strategist Multi Asset, and Nicolas Simar, Senior Portfolio Manager Euro & European High Dividend, to explore why 2022 might become a positive year for European stocks.
This year has been a stellar year for commodities, and we’ve all seen the recent surge in energy prices. So, what can we expect in the years to come? In our latest podcast, Stan Verhoeven, senior portfolio manager Liquid Alternatives at NN Investment Partners, explains why we might be on the verge of a new commodity supercycle.
In our “Choppy waters” base scenario we expect a volatile 2022 as markets grapple with the normalization of economies following the unprecedented stimulus in the past 18 months. In this podcast we share the highlights from our outlook event. Listen to the view of Chief Investment Officer Valentijn van Nieuwenhuijzen on the risks and opportunities in the year ahead.
Where to start when discussing the current market environment? Supply chain disruptions, rising inflation, looming interest rate hikes and concerns about Chinese growth make it increasingly difficult for investors to see where markets are heading. In our latest podcast, Ewout van Schaick, head of Multi Asset at NN Investment Partners, explores how to invest in this uncertain climate.
Last month, the green bond market passed the milestone of EUR 1 trillion in outstanding debt. In our latest podcast, client portfolio manager Douglas Farquhar explains how investors can benefit from this rapidly growing market.
A few weeks ago, most investors had never heard of Evergrande. Now some market watchers are talking about China’s Lehman moment. In our latest Market Talk, Ewout van Schaick, head of Multi Asset, and Joep Huntjens, head of Asian Fixed Income at NN Investment Partners, discuss what this debt crisis means for China and beyond.
What’s the impact of Long Covid on productivity, is herd immunity still a realistic goal and how can vaccines be spread more equally across the world? Mark Belsey, a senior healthcare analyst on NN Investment Partners’ European equity team, joins our latest podcast to tackle the most pressing investor questions about the pandemic.
Uncertainty in the financial markets is increasing as the Delta variant continues to spread and supply chain bottlenecks disrupt the recovery. In our latest podcast, Ewout van Schaick, NN IP’s head of Multi Asset, and Senior Economist Willem Verhagen reflect on last week’s Jackson Hole speech and discuss what’s next in the global economic recovery.
The Covid-pandemic has accelerated the trend toward online shopping. What will happen when economies return to normal? Jeff Meys, senior investment analyst on NN Investment Partners’ Global Sustainable & Impact Equity Team, joins our latest podcast to discuss the sector’s growth outlook and how investors can play this trend in an ESG-friendly manner.
In this extended summer podcast, Ewout van Schaick and Marcel van de Hoef take a step back from the daily market grind to reflect on how 1.5 years of Covid has changed the game for investors. Joining them is Maarten Geerdink, NN IP’s head of European equities. They cover a wide range of topics including the growing importance of high-frequency and sentiment data, the divergence between asset classes, meme stocks, cryptocurrencies, and the unstoppable growth in sustainable investing.
The price of carbon allowances in the EU has soared to record highs this year and demand is poised to increase in the medium term. In our latest podcast, Koen Straetmans, senior strategist on NN Investment Partners’ Multi Asset team, discusses whether the time is right for institutional investors to get involved in this emerging asset class.
Corporate earnings growth, economic numbers and improving Covid figures are all contributing to the calm positive vibe as markets bask in the summer sun. This feeling is not surprising according to NN IP’s Head of Multi Asset, Ewout van Schaick. Covid restrictions are being relaxed, life is returning to normal, spirits are rising. In this week’s podcast, Senior Investment Strategist Fouad Mehadi joins Ewout to reflect on some less expected developments: the recent flattening of Treasury market yields in both the US and Europe, despite the persistence of inflationary factors. Fouad explains why he is happy to maintain his duration underweight, why he currently favours high yield, and why it is important to look beyond the summer to what a chillier autumn might bring.
The use of sentiment data in investment analysis has grown precipitously over the past decade. Technological advancements have made it possible to analyse vast amounts of textual data from social media and other online sources, giving investors an up-to-the-minute understanding of how companies are perceived and what this might mean for future returns. In our latest podcast, Richard Peterson, CEO and founder of MarketPsych, joins Tjeerd van Cappelle, Head of AI Equity at NN Investment Partners, to discuss what we can glean from sentiment data, how we can apply it for improved alpha generation, and where the next frontier in sentiment analysis could lie.
In our latest Market Talk podcast, Ewout van Schaick, head of Multi Asset, comments on the surge in US April inflation data. He notes that the gradual re-opening of developed economies is being accompanied by a release of pent-up demand. Suppliers of many goods and service had meanwhile reduced supply in anticipation of a longer recession, which has created tight supply in parts of the labour market, acute shortages in some materials, major bottlenecks in supply chains and rising transportation costs and prices for many commodities.
In our latest podcast, we talk to Anil Katarya, global head of investment grade credit at Voya Investment Management in Atlanta. After a surprisingly resilient 2020, when markets, including US credits, navigated their way through the Covid-19 storm on a wave of central bank liquidity and government stimulus, the first quarter of 2021 has been more mixed. So where do we go from here? Anil, who manages NN IP’s US IG Credit strategy, emphasizes that interest rates and inflation are only part of the story for credit investors. US companies have a dominant position and are set to benefit from a strong global recovery. As an active investor with a bottom-up approach in a market with around 700 issuers, you really have to do your homework. But if you do, there are plenty of solid investment stories with bonds that offer attractive risk reward profiles.
Alistair Perkins, head of project finance and infrastructure debt at NN IP, has been involved in financing infrastructure projects for over 20 years. The types of deals have not really changed. He and his team still provide financing for government buildings, social housing, public transport, fibre-optic networks and hospitals, for example. Most of the projects have clear social benefits and positively affect many people’s lives. What has changed is the focus. In the early days, only the financial benefits and risks were evaluated. Now, an increasing number of investors want to make a positive impact, and that means also finding investments that contribute to the “S” of ESG. In this week’s podcast, Alistair explains why private debt is so well-suited to achieving social impact and looks at some of the challenges investors face when it comes to putting a value on social factors.
How can investors put their money to work for a better future? One way is through investing in listed equities whose products and services are tackling societal and environmental challenges. Impact equity investors focus not just on companies’ ESG risks but also on how they are serving their broader stakeholders: customers, local communities and the world beyond. In our latest podcast, Marina Iodice, senior portfolio impact equities, explains the chain of events that led her to impact investing, why investing for impact doesn’t mean sacrificing returns, and how the Covid-19 crisis has changed her thinking on societal and environmental challenges.
Investors’ attention and attraction to China has been growing for some years. Financial markets are becoming more accessible, economic reform programmes have momentum and growth prospects look better than in the developed world and in most other emerging markets. In this edition of Market Talk, Senior Emerging Markets Strategist Maar-ten-Jan Bakkum discusses the current climate for investors in this fast-growing and fast-moving market.
In January, we laid out our expectations for how the recovery could evolve throughout 2021 and beyond. Three months later, many of the trends we anticipated have materialized in the space of a single quarter. “We saw a fast decline in economic activity last year, a fast recovery ever since, a fast policy reaction and now a continued recovery that’s just very fast from a historical perspective,” said Marco Willner, head of investment strategy, in our latest Market Talk podcast.
Animal spirits – the herding behaviour of investors – have also played a central role in the speed of the recovery. Looking ahead, could the high levels of bullishness in the market lead to a correction later this year? A range of factors will determine this, including inflation expectations and equity market behaviour, according to Ewout van Schaick, head of Multi Asset. “Over-bullishness itself doesn’t create a sell-off. The market can become more vulnerable to a correction, but you still need a trigger.”
After a year of focusing on the pandemic and as the recovery gains momentum, financial markets are turning their attention to another potentially disruptive force. In today’s podcast, two NN IP experts talk inflation: Jaco Rouw, senior portfolio manager global fixed income, and Willem Verhagen, senior economist. They explore whether a short-term uptick could signal the start of a new trend towards higher long-term inflation and how, after a decade of ultra-low inflation, investors should go about preparing for what could be the beginning of a new regime.
“My biggest fear this time last year was that there would be so much focus on how to manage the crisis from a financial perspective that people would forget about climate, about social inequalities,” says Petra Stassen, senior responsible investment specialist. “But actually, the opposite happened.”
In our latest podcast, Petra and Chief Sustainability Officer Adrie Heinsbroek look back at the turbulent year behind us and explore questions stemming from our just-released Responsible Investing Report 2020. They discuss how Covid-19 and sustainability regulations are altering the landscape for responsible investing, what new trends are on the horizon, and how we tackle the thorny questions that often arise in our efforts to make a positive difference. “Some topics are not as simple as they appear on paper,” explains Adrie. “Investing responsibly is not just about mathematics. It’s about providing context and conversations.”
Joukje Janssen, lead partner for sustainable finance at PwC and Adrie Heinsbroek, NN IP’s chief sustainability officer, have been looking forward to 10 March 2021 for a while now. Today the first stage in the EU’s new sustainable finance regulatory framework comes into effect. This marks the first official step towards a greener Europe, but is just one element in a process that, for some, started months or even years ago. In today’s podcast Joukje and Adrie discuss what this milestone means to them and the effect it will have on the work they do.
The spike in government bond yields last week suggests that investors are pricing in a recovery in global growth and inflation as the Covid-19 vaccine roll-out continues. Still, the speed of the roll-out is not the only determining factor in the return to normality, as Marc Franklin, head of flexible multi asset, explains in our latest podcast. The policy response will play a key role, as governments will need to lead from the front in terms of easing restrictions.
The rise in potentially vaccine-resistant virus mutations could also be a roadblock on the path to recovery, according to Mark Belsey, senior investment analyst. The coming months will no doubt bring further surprises as new strains evolve, changing the way we approach the virus. “We’ve come a long way in the past few months, but we’re not out of the woods yet.”
Why trade finance? As far as Suresh Hegde, head of structured private debt, is concerned, its appeal is that “It’s real, it’s tangible and you can touch it.” Trade finance supports the physical sale of a broad range of products by giving parties all over the world the trust and security they need to trade with each other. In the case of NN IP’s trade finance strategy, these are mostly transactions in commodities such as agricultural goods, foodstuffs and metals, where ESG factors are also taken into account. Why now? Institutional investors are looking for new investment vehicles and this asset class offers short duration and less exposure to market movements, while paying an attractive yield.
Markets remain optimistic even in the face of weak jobs data, prolonged lockdowns and delays in rolling out Covid-19 vaccines. Many of the lost jobs are in lockdown-driven sectors and are likely to return as restrictions are pared back, and the number of vaccines ready for distribution is increasing, according to Marc Franklin, head of Flexible Multi Asset.
“People are saying that in a few months’ time, a high percentage of the population will be vaccinated, and these lock-down restrictions can ultimately be lifted or pared back,” he says.
“The market is thinking more about what will happen after this pandemic,” said Ewout van Schaick, head of Multi Asset. “If you want to play the cyclical recovery, which we still expect later this year, don’t put all your eggs in one basket. Make it a diversified portfolio of bets.”
What lies ahead for emerging market debt in 2021, and where can investors find value? For Marcin Adamczyk and Bregje Roosenboom, the answer lies in divergence. The asset class should see a substantial growth recovery, but it will be unevenly spread across regions and time periods as countries follow different paths to normalization. This divergence is already visible, as emerging Asia has led the recovery so far while the high yield segment still appears undervalued relative to our projections.
In this environment, active management with a focus on fundamentals is key to locating opportunities. Countries that can best adjust to the new normal stand to benefit most from the growth recovery and the ongoing search for yield.
“It almost seems as if we are living in a different universe” says Roel Jansen, co-lead portfolio manager of NN IP’s Euro Investment Grade Credit strategy. If you look at the IG space over the last couple of months, investors seem to have zoomed in on loose monetary policy and the light at the end of the Covid-19 tunnel, and to have tuned out all the other “noise”. The calm market belies a busy work environment, according to fellow Co-lead Alfred Meinema, where there is plenty of interest in the strategy. But with spreads virtually back at early 2020 levels and low yields, what is the appeal of Euro IG? Jansen and Meinema both agree: a lot of the upside is that there is very little downside. With negative yields on safe government paper, institutional investors are moving into IG where they can get a small positive yield without worrying about getting their money back. A trend that looks set to continue.
Financial markets have gotten off to a benign start in 2021, despite civil and political unrest in the US. Prospects for a fairly prompt recovery from the coronavirus crisis look good, and markets have already priced in a fair amount of optimism. Equity markets have risen gradually and US Treasury yields have increased, rising well above 1% in the first days of the new year. “This is perfectly in line with what we expect for this year,” Marco Willner, head of investment strategy, says in our latest podcast. “We also expect further tightening of spreads in the credit space.” Willner’s views and those of NN IP’s multi-asset investing team are presented in “Back to a new future”, NN IP’s outlook for 2021, which defines three possible scenarios for the coming year.
“What we are seeing on the interest rate side at the moment, especially in the US, where higher yields are driven by higher inflation expectations, actually fits quite well in our base case and also our more optimistic scenario,” notes Ewout van Schaick, head of Multi Asset. He expects another good year for equity markets, but with different underlying dynamics. Sectors hit hardest by the pandemic should make a comeback, thanks to central bank policies and fiscal stimulus. Corporate bonds are poised to outperform government bonds, and commodities offer opportunities, particularly in the more cyclical segments.
European equity markets are off to a promising start in the first days of 2021. Risk factors including Brexit and the US elections have dissipated, and with the vaccine rollout underway, it seems likely that the economy will reopen by the summer. In our first podcast of the year, Maarten Geerdink, head of European equities, explains why we believe 2021 should offer a constructive backdrop for European equities and where we still see potential for headwinds. He also discusses why the European recovery plan should bolster small caps, why cyclical stocks should be especially well positioned for outperformance, and how taking an adaptive approach can help investors stay the course over the coming year.
“A year that we never expected, and a year we’ll never forget.” With these words, Ewout van Schaick sums up the defining traits of 2020. The new year will not mark a sudden shift: uncertainty linked to Brexit and US fiscal policy continues to roil markets, and the first few months of 2021 will likely see continued mobility restrictions. Still, a different market environment is probably on its way, marked by a sector rotation in equities and a search for increasingly elusive yield in fixed income.
In our final podcast of 2020, Ewout reflects on how the lessons of this exceptional year will alter his investing approach in the new year and beyond. We cannot predict the next black swan event – but we can prepare for it by staying adaptive, focusing on the right topics, and prioritising sustainability every step of the way.
In the last three or four decades we have become accustomed to a regime where monetary policy does all the heavy lifting. But it has become clear that some parts of the mechanism do not work as well as they used to. Central bank policy was a lot more effective in curbing high inflation than it has been in teasing stubbornly low inflation higher. According to Senior Economist Willem Verhagen, “The job of pushing the economy back to full employment and achieving price stability is now in the hands of fiscal policymakers.” What we can expect from central banks in 2021 and how will the ECB and the Fed need to adjust their policy response to create a benign environment for economic growth?
In this week’s edition of Market Talk, Chief Investment Officer Valentijn van Nieuwenhuijzen and Head of Investment Strategy Marco Willner assess one of the most memorable years in recent memory. They also look ahead to 2021, a year in which economies and markets are poised to recover as the world moves out of the Covid-19 shadow.
Value stocks may finally be on the verge of waking up. Growth stocks have consistently outperformed in the 12 years since the Great Financial Crisis, but the recent positive vaccine news and renewed hopes of fiscal stimulus could spark a sustained revival in the fortunes of value sectors. In this week’s podcast, Robert Davis, senior portfolio manager European equities, explores the deeper theoretical drivers behind this potential shift and explains why it all comes down to fiscal policy action. “Value isn’t dead, but it certainly has been in quite a deep sleep.”
Markets have moved steadily higher in the past two weeks. The outcome of the US election, which had been a source of uncertainty that was keeping investors cautious, offered some stability. Sentiment got another big boost with the news that Phase 3 testing of two coronavirus vaccines showed effectiveness rates far higher than markets were expecting.
A number of aspects regarding these and other anti-corona products in development are still up in the air, such as how quickly they can be manufactured and what logistic problems the distribution process may bring, as well as medical questions such as effectiveness against re-infection.
In this week’s podcast, Principal Responsible Investing Adrie Heinsbroek talks about how the Covid-19 pandemic has affected the future of responsible investing and discusses an NN IP paper that asks academics and investors from a range of countries to give their take on this topic. He explains why we now have a chance to step up our game. Why the boundaries between economy and society, and financial and ESG information are becoming increasingly blurred. Adrie also explores how the behaviour of governments, companies and individuals – the key stakeholders – are inextricably linked and will shape our future. Asset managers too can play a vital role in helping to finance change and change finance. But it won’t happen overnight. “It’s a transition, not a revolution.”
The winners of yesterday’s elections in the US may not be known for days or even weeks. A handful of key states have yet to complete counting ballots, and President Donald Trump has already said he plans to challenge the vote count in the courts. A “blue wave”, whereby Democrats take back control of the Senate as well as the White House, may not be impossible but is looking far less likely than markets may have thought.
While Trump’s remarks may only serve to increase and prolong the uncertainty regarding the election outcome, markets are so far remaining calm. In this week’s podcast, Ewout van Schaick and Marco Willner discuss how they positioned their portfolios going into the election, what the chances are now of badly needed fiscal stimulus, and what it all might mean for the various asset classes.
Emerging markets have so far staged a seemingly synchronised recovery from the Covid-19 crisis, with spreads narrowing across the EMD sub-asset classes. Going forward, the recovery will become patchy as certain segments and regions benefit from opportunities for growth while others fall behind. In our latest podcast, Head of EMD Marcin Adamczyk and Client Portfolio Manager Bregje Roosenboom explore what the future could hold for emerging markets debt. They discuss how the upcoming US elections might affect the asset class, what developing trends are on the horizon, and why we currently prefer the high yield segment of the universe.
Global markets appear to be looking past the uncertainty that clouds the near-term landscape and focusing instead on the promise of a sunnier future. Two linked factors are driving this optimism: the prospect of US fiscal stimulus and the upcoming elections. Given the decreasing likelihood that Republicans and Democrats can reach a deal this week, the specifics of the stimulus package will likely depend on the next president and Congress.
In this week’s podcast, Ewout van Schaick explains why markets are pinning their hopes on Democrats’ regaining control of Congress as well as the White House, why such a blue wave could lead to fundamental regulatory changes in certain sectors and why investors shouldn’t discount the risk of a disputed election. He also explores the current situation in Europe and what it means for our multi-asset portfolios.
The tech sector has largely bounced back from its plunge in early September, which now appears to have been a technical correction rather than a fundamental shift. The ongoing second virus wave could provide new growth opportunities for cloud-exposed firms; conversely, positive vaccine news could lead to a rotation towards more cyclical sectors. In our latest podcast, Portfolio Manager Sustainable Equity Hans Slob explores the long-term case for investing in the tech sector and where we still see room for growth. He is joined by Principal Strategist Multi Asset Patrick Moonen, who explains why we tactically favour materials and certain industrial sectors in our multi-asset portfolios.
According to Portfolio Manager Jovita Razauskaite, 2020 has so far been a “one of a kind” year for green bonds. The market recovered quickly from a temporary dip in issuance in the initial phase of the Covid-19 pandemic and has not looked back since, hitting a new issuance record of EUR 67 billion in the second quarter. The volume is impressive but so is the diversity of issuers tapping the market.
In addition to AAA-rated sovereigns like Germany and Sweden launching their green bond programmes, the breadth of the corporate segment is steadily improving as more industrials issue green bonds. Despite the market’s impressive growth, demand is outstripping supply, resulting in oversubscribed new issues and spread compression. In this podcast, Razauskaite explores what is driving developments in this dynamic market and why the growth looks set to continue.
Positive drivers such as the strength of the IT sector and fiscal support in the US have stalled. Markets are again focused on the spread of Covid-19 and how soon we can return to normality. For the longer term, the development of an effective vaccine is the key question. Indications of pre-existing immunity in the wider population give cause for optimism, but the logistics of wide-scale distribution could be a hindrance. For now, markets are focused on infection patterns as the second wave spreads across much of Western Europe. Governments must choose between containing the virus and preventing the economic damage that renewed large-scale lockdowns would cause.
In this week’s podcast, Ewout van Schaick and Mark Belsey explore the current state of virus developments, the economic and market ramifications of further lockdowns, and what we expect for the coming months.
Signs indicate that the recent sell-off in tech stocks was a technical correction rather than a fundamental shift, though it remains uncertain whether the sector can resume its previous meteoric growth path. Meanwhile, the broader economy was buffeted by mixed signals as US unemployment ticked up and the Senate failed to pass a stimulus bill. In this week’s podcast, head of investment strategy Marco Willner explains why we took this opportunity to overweight equities, what a Democratic victory in the US elections could mean for the tech sector, and what it would take for markets to move higher from here. He also explores how investors can benefit from keeping a cool head and staying adaptable in these exceptional times.
- The tech sell-off appears to have subsided; the sector is still up 21% year to date
- Broader economic recovery generally looks stable despite recent mixed signals
- Investors can benefit from staying adaptable amid uncertainty
For many investors, the strong sell-off in tech stocks late last week represented a long-awaited technical correction after months of euphoria. Others are questioning whether fundamental factors played a part, and whether the underlying fundamental drivers remain solid enough for the overall rally to continue. Meanwhile, central bank support remains strong, bolstering developed market credits, though risks still linger in the background.
September is usually the month when investors return to the markets after a summer break and when companies re-enter the new issue market. We talked to Alfred Meinema, Co-lead Portfolio Manager Euro Investment Grade at NN Investment Partners, and Rob Amenta, Senior Portfolio Manager US High Yield, based in NN IP’s New York office, about the outlook for the rest of the year. But we also took time to reflect on what has so far been an unprecedented year for credit issuance and learn why 2020 will almost certainly be entering the record books.
It may seem as if markets have been in a holding pattern for the whole of August, which was largely characterised by slow news flow and limited volatility. For Ewout van Schaick, who returned from his summer holiday to find a world that barely differed from the one he left, this is certainly the case. Still, with the approach of autumn and the ongoing threat of a second wave of Covid-19 infections, this period of relative quiet is unlikely to last. As Ewout explains in our latest podcast, several key factors will shape the coming months. These include the evolution of high-frequency indicators such as mobility and restaurant data, a renewed deal on fiscal policy support in the US, and concrete developments related to the virus itself.
Today Marco Willner, NN IP’s Head of Investment Strategy, joins us again to look at how the situation has changed since we talked to him in our 23 June podcast (Two medium-term economic scenarios help us navigate the uncertainty). Marco takes a fresh look at some of the factors that could push the economy closer towards our boundary scenarios – either a speedy economic recovery or a prolonged stagnation. Although the picture has become more mixed, growth and earnings numbers have been better than expected. The increasingly prominent theme for the medium term is the US elections – an event which will shape many of the other variables.
Investors have used real-time data that track movements in market and economic sentiment for years as a supplement to traditional indicators such as purchasing managers indexes and national statistics. In the Covid-19 environment, these high-frequency alternative data are playing a much bigger role in anticipating market movements. The pandemic has sent markets lower and then higher with unprecedented swiftness, leaving investors who waited for official figures in the dust.
High-frequency data have become indispensable in detecting labour market and consumer sentiment trends. These two segments of the economy had been driving growth before the pandemic and were then hit hardest. Aviral Utkarsh, multi-asset strategist at NN Investment Partners, explains in our latest Market Talk podcast how high-frequency alternative data have become part of our investment process and what this information is telling us now. For more info check: https://www.nnip.com/en-INT/professional/insights/podcast-getting-a-jump-on-markets-with-high-frequency-data
Sustainable credit is here to stay. With pressure from stakeholders increasing in the wake of the Covid-19 crisis, companies with a long-term focus must build sustainability into their business strategy or risk irrelevance. How can we determine which companies are genuinely contributing to a better world, and which are simply going through the motions?
In our latest podcast, Annemieke Coldeweijer, co-lead portfolio manager sustainable credit, discusses how the Covid-19 crisis has changed the sustainable credit landscape, how to assess whether companies are truly sustainable, and why we’re committed to engagement over exclusion. “Exclusion alone is not enough,” she says. “It’s by starting that dialogue, identifying the companies with positive trends and positive momentum, that we can make a difference in our portfolio.”
The euro/dollar exchange rate is at its highest level in two years. On the euro side, the speed and coordination of the European policy response to the pandemic have buoyed investor confidence. On the dollar side, increased supply and a rebound in investor sentiment have weakened the currency. Marc Franklin, head of flexible multi asset, explains in our latest podcast how this shift has forced investors to rethink their portfolios for the coming months. He explores why we’re more positive on emerging markets debt and precious metals in light of the dollar weakness, how euro appreciation can act as a headwind for European equities, and whether it’s safe to view these currency developments as a fundamental shift.
The economic recovery on both sides of the Atlantic hangs in the balance this week. EU leaders continue to negotiate the shape of the European recovery fund, while Congressional leaders in the US are bringing their proposed rescue packages to the table. In the US, where virus infections continue to hit new highs week after week, economic indicators look less than promising, and current fiscal support measures are set to end in the coming days. Meanwhile in Europe, Germany and France face tough opposition in gaining approval for a sizeable rescue package.
Still, as Ewout van Schaick explains in our latest podcast, our current asset allocation reflects our belief that EU leaders will ultimately commit to a comprehensive recovery fund. “The most important steps towards EU unity have always needed a crisis moment and tough negotiations. It’s only after a heated debate that we make the best decisions.”
With the shift to virtual annual general meetings (AGMs) amid the Covid-19 crisis, companies and investors alike have had to adjust their expectations and behaviour. In many cases, investors have been limited to submitting questions and voting only in advance, with no opportunity to change their minds or ask follow-up questions based on the company’s responses. Meanwhile, the engagement focus has shifted as investors have pressed for answers on treatment of stakeholders and have demanded clear justification of remuneration decisions. In our latest podcast, senior responsible investment specialist Faryda Lindeman explores the implications of the shift to virtual AGMs and virtual engagement, both now and in the future, and assesses how investors can maximise their influence in this new reality.
- The shift to virtual AGMs this year has created a new and challenging reality for investors and companies.
- The pandemic has amplified demands for company accountability on remuneration, the treatment of stakeholders.
- If companies and investors rise to the challenges of virtual meetings, everyone stands to benefit.
The fast-growing alternative credit space is known for its illiquid nature and apparent complexity, but investors who take the time to explore the asset class can find themselves richly rewarded. With a wealth of available solutions to match any combination of liabilities and a wide variety of duration types, alternative credit offers attractive yields and long-term stable cash flows – also during market downturns. In our latest podcast, Niels Bodenheim, head of alternative credit, explains how investors can get the most out of this complex asset class and where he believes the market is still untapped.
At the end of an impressive second quarter marked by strong support from fiscal and monetary policy, the market focus has returned once again to virus developments. Infection numbers in the southern US and in several emerging markets are increasing at a record rate amid stalled re-openings and renewed lockdown measures. The big question is how this development will affect consumer sentiment: if rising fear leads consumers to delay spending, this could dash hopes for a V-shaped recovery. In our latest podcast, Ewout van Schaick explains why we’re opting for corporate credit over equities in the current environment, where we see risks of an economic plateau, and how the upcoming November elections could shape market expectations.
Market observers have been keeping a close eye on short-term factors such as market dynamics, sentiment and investor behaviour in the past three months. Meanwhile, the corona crisis has not gone away and the economic impact is only just starting to be felt, says Ewout van Schaick, head of Multi Asset at NN Investment Partners.
Joining Ewout in our latest podcast is Marco Willner, who became NN IP’s head of investment strategy in April. His first order of business was to formulate a medium-term outlook that envisions the possible futures that lie ahead in the coming two years. He maps out two boundary scenarios, one in which the economy recovers quickly and one in which it heads to a prolonged stagnation. Seven factors will push the actual outcome one way or the other, he explains.
After three months of gains that brought markets almost back to where they were before the Covid-19 rout in March, things suddenly changed last week. Worsening virus figures in some parts of the US spooked markets, just as the economy in other areas was reopening. Fed Chair Jerome Powell’s downbeat message on the outlook for the US economy added insult to injury and the markets took a dive. In our latest podcast, Ewout van Schaick explains that although volatility may remain elevated and there may be weakness in the short term, the positive factors that have been driving the markets are still in place.
Markets have staged a tremendous recovery over the past couple of months, largely predicated on assumptions of a strong V-shaped recovery and bolstered by improving virus data. Infection growth continues to decline as countries reopen, while early vaccine trials have delivered positive results. Still, the threat of a second wave hangs in the air and there is no certainty that any vaccine will be effective, making it difficult to be more than cautiously optimistic about the timetable for economic recovery. In our latest podcast, we spoke with Ewout van Schaick and Mark Belsey about what we can expect in terms of vaccine development, the likelihood of a second wave, and why, despite the multitude of unknowns, we’re increasing our risk-on stance in our multi-asset portfolios.
The European Union took further steps towards political and fiscal union last week as the European Commission put forward a rescue programme even more ambitious than the original Merkel-Macron proposal. European assets also benefited from the continuing economic recovery while growth stocks took a backseat. In our latest podcast, Ewout van Schaick explains how the European proposal represents a significant step forward on the path to European unity, in stark contrast with ongoing divisions elsewhere. “A unified Europe, a strong and large Europe, is the only way that we can deal with these increased political tensions.”
Two news stories have dominated markets in the past week: one of unity, as Germany and France reached a solution on the European budget situation; the other of discord, as China’s implementation of security regulations in Hong Kong threatens to spark renewed upheaval and lead to escalation in US-China trade tensions. On balance, markets have traded up as the German-French accord hinted at a more robust fiscal and political union for the Eurozone, but the news from China has led to another wave of uncertainty. In our latest podcast, Ewout van Schaick explains how the German-French proposal helps to level the European playing field and why, despite the ongoing Chinese tensions, we’re sanguine on the prospects for emerging markets.
Technology stocks have held up much better than other sectors throughout the coronavirus crisis, underpinned by skyrocketing usage of digital communications tools. However, with many tech stocks even offering a positive year-to-date return, valuations are now pricing in a V-shaped recovery and may not withstand a prolonged downturn. In our latest podcast, Ewout van Schaick, Head of Multi Asset, and Hans Slob, senior investment analyst, discuss which tech segments currently look appealing from a defensive perspective and which crisis-induced trends might be here to stay. (Transcript available below.)
Equity markets have rebounded strongly in recent weeks, with indices now at or close to pre-crisis levels. Markets are placing a great deal of faith in policy support and positive virus developments, and the recent earnings season was much less downbeat than expected. Still, market positivity also creates vulnerabilities, as any negative news flow around the virus or as economies reopen could throw the recovery off course. In our latest podcast, Ewout van Schaick, Head of Multi Asset, explains our scenarios for the economic recovery and what we see as the most pressing questions as we move towards normalisation.
Information moves markets, even when it’s in the form of a tweet. By analysing news flow and social media posts to calculate consumer, business and investor sentiment, we can better assess where markets are headed. Sentiment data is more timely than corporate and macroeconomic data, making it particularly useful during periods of extreme volatility. In our latest podcast instalment, our CIO Valentijn van Nieuwenhuijzen and Richard Peterson, CEO of MarketPsych, explore the benefits and challenges of measuring and using sentiment data. They explain how they expect the use of sentiment data to evolve and discuss the need for human creativity alongside machine learning inputs. “It is man and machine together,” says Van Nieuwenhuijzen, “that provide the most robust decision-making and therefore the best investment results.”
Emerging market equities are looking more attractive than European stocks, according to Ewout van Schaick, head of Multi Asset. Much of the EM equity index consists of technology companies, which are either the beneficiaries of the coronavirus crisis or more resilient to it. “That makes emerging market equities a lot more attractive than those in Europe, where technology accounts for only 6% of the benchmark,” Van Schaick says in our latest podcast. Overall investor positioning in EM is relatively low and valuations are still at a 20% discount to the rest of the world.
Being green in normal times when markets are stable – OK. But doesn’t investor focus shift in a time of crisis? According to Bram Bos, Lead Portfolio Manager Green Bonds, the answer is a resounding no. Although green bonds also suffered in the corona-induced market volatility, clients seem to be holding on to their bonds and in some cases increasing allocations. Corporate green bonds have also outperformed their traditional peers during the market turmoil. Bos explains why, after a hiatus in issuance as a result of the crisis, he expects corporate and sovereign issuers to return to the market and why some of the corona-induced increase in government spending could find its way into green bonds. “After all, the next crisis could be a climate crisis.”
Financial markets may be overly confident about the positive medical news on the coronavirus and the strong monetary and fiscal support from policymakers, according to Ewout van Schaick, head of Multi Asset. “There is a sizeable risk that the opening up of the economy will be much slower than lot of people think right now.” He still sees the best invest-ment opportunities in corporate credit space. “Last week we saw again large double-digit numbers in investment grade spread tightening, and even bigger tightening in high yield spreads,” Van Schaick says in our latest podcast. “As long as the Fed and the ECB are there as major supporters of these markets, then we feel that is the place to be for an investor at the moment.”
European high yield bonds should have a bright future in the coming 12 months. The monetary and fiscal stimulus measures that were announced over the past few weeks are driving demand; the only problem is that there are hardly any assets left to buy. In our latest podcast instalment, Sjors Haverkamp, Lead Portfolio Manager European High Yield, explains why we foresee strong returns for the coming year and where we expect new opportunities to arise.
Markets will get the first readings on the coronavirus’s business impact as the first-quarter earnings season starts this week. Still, corporate results will reflect only a month of lockdown measures, and company guidance about the coming quarters will carry more weight, says Ewout van Schaick, head of Multi Asset. He prefers developed market corporate bonds over equities, particularly since the US Federal Reserve’s most recent expansion of its bond-buying programs. “As an investor in these uncertain times, you should focus on what you know rather than on what you don’t know,” Van Schaick says in our latest podcast. “It’s very difficult to know how severe the impact on corporate earnings will be, and to assess the impact on equities.”
Convertible bonds have a rich history of outperformance: they have outperformed equities not just during the recent market turbulence but also over the past 25 years. In our latest podcast episode, convertible bond experts Tarek Saber and Martin Haycock explore the benefits of investing in convertibles during market volatility and throughout the cycle. They discuss how thematic investing helps them navigate economic cycles and how investors can best get started in the complex world of convertible bond investing. "Investing in convertibles is like climbing with a rope," says Haycock, senior product specialist at NN Investment Partners. "It’s somewhat slower as you make your way up the slope, but if you slip, you have much less far to fall.”
Price movements last week on equity and bond markets were more limited than in previous weeks. Whether this calm continues will depend on whether coronavirus data show signs of improvement, according to Ewout van Schaick, head of Multi Asset. Developed market sovereign bonds and high-quality corporate bonds may offer allocation opportunities for investors seeking alternatives to cash. “We need to get some guidance on when the lockdowns will end before we see opportunities in the more risky asset classes,” Van Schaick says in our latest podcast. “That’s why we still stay quite cautious on equities.”
As Head of Fixed Income at NN IP in Singapore, Joep Huntjens was in a position to feel the early effects of the corona crisis first-hand. However, it was only in March, when hard-hit countries like China and South Korea were starting to recover, that markets worldwide plummeted, including those in Asia. While the US and Europe are still firmly in the grip of the crisis, Asia is starting to pick up the pieces and can at least start to assess the damage. In this podcast, Joep explains where he sees value, why he has a bias to riskier segments like high yield and why careful credit assessment and corporate resilience are key in maximising the opportunities in Asian debt.
“While our focus is naturally on other things right now, we should not forget that we still face challenges in areas like climate change and society in general,” says Senior Responsible Investment Specialist Petra Stassen. In this podcast we talked to Petra and her colleague Adrie Heinsbroek, Principal Responsible Investment, about our recently published Responsible Investing Report 2019. They discuss our role as an investor and our responsibility to put our clients’ capital to work in a way that fulfills their financial and sustainable ambitions. The report covers a range of topics – from the importance of financial materiality in ESG integration to the concrete results of our voting and engagement activities. What do our responsible investing experts regard as the highlights of 2019, and where will their focus be in 2020 and beyond?
Markets rebounded last week after central banks and governments took steps to limit the coronavirus fallout, but we are by no means at the end of the crisis, according to Ewout van Schaick, head of Multi Asset. Earnings estimates have probably not sufficiently priced in profit declines and changes in dividend policies are likely to be negatively received by the market. A real turn in the market will require a real turn in the problem – in the form of a new medicine or vaccine, or a at least some visibility that we will return to normality in the next few months, Van Schaick says in our latest podcast. “Until then it’s very difficult to see an end to the huge volatility in the market.”
Markets remain beset by turbulence as pundits offer wildly divergent predictions for the coming recession. With no clear endpoint in sight and no certainty as to which companies will survive the downturn, pricing in the recession is a formidable task for equity investors. Still, given that markets will likely price in a recovery before it becomes apparent in the real economy, the current environment may offer an attractive entry point despite short-term volatility. In our latest podcast installment, Maarten Geerdink, Head of European Equities, explains the importance of dedicated sector analysts and the benefits of taking a longer-term perspective during a crisis.
Uncertainties regarding the coronavirus – when the spread of the epidemic will slow and how long lockdown measures will last – are keeping financial markets under stress. The US government’s failure this weekend to agree on a stimulus package raises concerns about the country’s ability to fight the virus and its economic impact, but last week’s measures by the Fed and the ECB have helped stabilize bond markets, according to Ewout van Schaick, head of Multi Asset. “Investors who don’t want to put all their money in cash can allocate part of their money again in safe government bonds,” Van Schaick says in our latest podcast. “For more opportunities in the market, I think we have to wait until fiscal policy is helping out as well.”
Funding levels, asset allocation bandwidths, liquidity – all factors that concern pension funds in the current volatile market environment. Although it is difficult not to be affected by day-to-day developments, pension funds generally have long-term goals and strategic asset allocation plans that have been thoroughly stress tested. However, plummeting stock prices have caused many funds’ fixed income/equity balance to shift beyond their investment bandwidths. So should they be looking to buy equities and readjust their portfolios? Jeroen Wilbrink helps Dutch pension funds control their balance sheets and select investment opportunities. In our new podcast episode, he assesses how they can maintain a steady course through the ongoing crisis.
Financial market stress is mounting as the coronavirus continues to spread. With the fatality rate increasing in many parts of the world, governments are taking unprecedented measures, and the impact on companies around the globe will be huge. Will these measures work? How long will they remain in effect? The uncertainty these and other such questions create is reflected in the enormous jumps in recent market volatility, with intraday price movements of 10% almost every day. Ewout van Schaick, head of Multi Asset, advises investors to take a step back and not to panic. “We would definitely favour a wait-and-see approach,” he says in our latest podcast.
The past week has brought about the largest one-day correction in equity markets for more than 30 years. Central banks in developed markets are moving to stem losses and inject liquidity, but they have little ammunition left. With no certainty as to how long the outbreak might last, investors are seeking shelter in an ever-shrinking pool of creditworthy assets. In our podcast episode, Chief Investment Officer Valentijn van Nieuwenhuijzen discusses the levels of investor fear driving the sell-off, potential credit and equity opportunities, and where the markets could be heading next.