Current investment horizon

Julius Baer’s Investment Approach is about accepting the realities of today’s world and at the same time recognising the major shifts taking place over several years that transform life as we know it. Confronted with an investment horizon increasingly led by politics for example, and a longer-term transition into all things digital, traditional asset allocation no longer works and a greater dose of patience to ride out volatility is needed.

Accepting given fundamentals and adopting the relevant investment style

In keeping with today's investment horizon, Julius Baer adopts a forward-looking investment style that is actively managed by keeping an ear to the ground, dissecting the facts and decisively taking calculated risks to generate enhanced returns over the longer term. While stocks, bonds and cash remain important in the portfolio, we attribute a greater focus to alternative investments such as financial derivatives, private equity and hedge funds, to take advantage of both current fundamentals and decade-long economic developments.

We consider the following as today’s key market drivers:

  • Income gap – growing globally due to technology and misguided government policies
  • Digital disruption – Jobs threatened, deflation and winner takes all economy
  • Interest rates – Zero to negative
  • Political dominance – Increasingly dominating the economy e.g. managed deleveraging mitigating deflationary pressures
  • Tight regulation – excess regulation restricting growth and creativity
  • Structural issues – e.g. euro imbalances

Market patterns and positioning

Watching for clues in markets and being able to act decisively takes skill. We pride ourselves on our ability to assertively reallocate investments based on our deep understanding of market behaviour and self-confidence to routinely reinvest returns to generate greater earnings. Markets typically fall into one of four scenarios (shown below) and at any point in time Julius Baer understands what is driving markets. Through active asset allocation, we take advantage of investment opportunities when they arise, thereby potentially enhancing client investment returns.

Typical market behaviour

Market fluctuations provide ample opportunity for broad diversified investments to preserve and grow capital over the longer term. Julius Baer allocates a percentage of the portfolio to alternative investments to maximize returns.
 
 

External shock

Occasionally events happen that surprise the world, e.g. 9/11, catching everyone completely off guard. Julius Baer constructs portfolios which look to minimise losses in such times by taking advantage of prices that deviate from their fair value in the shorter term.

Systemic issues

As soon as a systemic issue such as the financial crisis of 2008 has been recognised, Julius Baer looks to swiftly reduce positions, reinvesting only when a comprehensive government policy response has been given.

Economic contraction

Markets can lose face value ahead of economic contractions. Julius Baer actively manages risk by allocating assets based on its tactical assessment of markets and re-enters the market as soon as the cycle turns again.

Three ways to manage money

Recognising market patterns forms the basis of a carefully constructed portfolio that effectively combines three ways to manage money:

  • Passive: a steady mix of assets that aims to limit losses
  • Active Judgemental: attentively watching for clues and instinctively positioning the portfolio to generate enhanced returns
  • Active Systematic: investments based on a numerical assessment of the data available

Responsible investment strategy

As a signatory of the UN-supported Principles for Responsible Investment (PRI), we are committed to implementing the Responsible Investment principles, hence taking material ESG (environmental, social & governance) risks into account in our investment process.

Further Information

Would you like to learn more about the Julius Baer Investment Approach? Your relationship manager would be delighted to provide you with more detailed information