The corona pandemic crashed the markets and deeply unsettled investors. Even if the stock exchanges have shown clear signs of recovery since then, the strong fluctuations leave many market participants at a loss. Experts give tips on how to invest your money wisely after the crisis.
• Markets recovered significantly after the Corona crash
• Volatility remains high
• Experts give investment tips
Shares, commodities, bonds or foreign exchange? For investors who want to invest on the stock exchange, there is always the question of the right investment opportunity. The corona crisis made this decision even more difficult, because given the global recession that appears to be certain, it is difficult for many non-experts to predict where an investment will be worthwhile. With this in mind, Bloomberg looked at the investment strategies of market experts: How would financial market professionals invest $ 1 million? Sometimes the answer lies away from the stock exchange.
Gold - darling in the crisis
Gold as an investment is still popular with many investors. Precious metals are particularly popular in economically uncertain times - gold has still not lost its status as a crisis currency.
Peter Fitzgerald, Chief Investment Officer Multi-Assets & Macro at Aviva Investors, would also at least partially invest his money in the precious metal, according to Corona. "It is comforting to know that the money is safely invested in a metal that has been valuable for millennia and does not correlate with the broader securities markets. With central banks printing so much money and flooding economies with liquidity to cushion the pandemic Gold is a good hedge against currency devaluation, including the US dollar, "Bloomberg quotes the expert.
He recommends gold prospects to ETFs, but these should definitely be backed by physical gold.
Despite all the positive aspects, Fitzgerald also sees problems with a gold investment. After all, it does not deliver any cash flow, it does not generate any income and it also does not pay a dividend. "Gold is an investor's Disneyland - a magical kingdom you have to believe in to enjoy."
ETFs - profiteers of the flood of liquidity
Investing money in stocks, on the other hand, recommends Nilson Teixeira, chief investment officer at Macro Capital. In view of the unprecedented flood of liquidity from the international central banks, with which currency keepers around the world want to contain the consequences of the pandemic, one can already achieve a considerable return simply by investing in important stock indices, the expert said.
He would overweight Asian equities outside of Japan, after which he would invest in US stock barometers like the Nasdaq 100 and Russell 2000, he told Bloomberg. He also thinks gold is a good addition to a portfolio.
"It will take a while for the central banks to start raising rates, so there will be a perfect growth environment. The emerging markets as a whole tend to do better in this scenario," he said, with Brazil only seeing a lot of uncertainty.
Green investments and technology
Sustainable investing has been a trend on the market for some time. At Shirley Crystal Chua, founder and group chief executive officer at Golden Equator, green systems are also ahead. ESG investments (environmental, social and governance) did better in the early stages of the pandemic than the broad market, Denmark, where sustainable investment is important, is by far the best performing stock exchange, according to the Bloomberg expert.
Against this background, she also attaches importance to "companies, stocks, bonds and funds that achieve social, ecological and financial goals". At the same time, they are targeting investments that help the economy and at the same time strive for development goals such as a cleaner environment, better governance, safer products [...] and better integrative growth and employment practices. "In this segment, the expert expects continued strong demand:" We expect that this trend is accelerating as sustainability becomes the central investment philosophy for more private investors ".
In addition to sustainable investments, Shirley Crystal Chua also focuses on stocks from the technology sector that may benefit in connection with the trend towards remote working and the increasing demand for digitalization. As more and more people are forced to participate in the digital economy, business models that provide important services and products online will continue to experience strong growth, the expert believes.
Real estate as an investment
Hans Olsen, chief investment officer of the Fiduciary Trust, would put his main focus on real estate with a $ 1 million investment. He specifically mentions real estate outside of the big cities to Bloomberg. Corona has triggered a rethink in many people, especially those with families, he believes. With regard to the quality of life combined with affordable real estate prices, regions outside the big cities are "a long-term option for this type of capital".
But Olsen also suggests a somewhat unusual alternative investment: "Go out and restore some old Land Rovers, the early models of the Defender or Pre-Defender series," advises the expert. Anyone who buys and restores the vehicles cheaply, can in his opinion achieve a good return.
Invest in bonds
For many people, the bond market is not considered a profitable investment, but Stan Young, who works as a managing director and senior client advisor at Rockefeller Capital Management, sees it differently. "What many people forget is that the bond market is actually a huge mosaic of opportunities. It's by far the largest asset class," Bloomberg quotes.
Even the US Federal Reserve is currently active in this market and is aggressively buying fixed-income securities. "But the Fed can't buy everything," said Young. Indeed, the monetary watchdogs focused on investment grade bonds, into which much of the capital made available has gone. According to Young, what is uninteresting for the Fed, but could be an opportunity for investors, is private fixed income, which he believes has a strong return potential against risk. In this context, the expert specifically mentions corporate and consumer loans, real estate bridge loans, aircraft leasing and loans for small businesses.
Gaming and VR
For the well-known investor Mike Novogratz, CEO of Galaxy Investment Partners, the gaming industry is a worthwhile investment. He thinks specifically of the opportunities offered by the metaverse, the concept of "a virtual universe that connects virtual and expanded realities with each other and connects them with the physical world", against the background of 5G and games in the cloud.
He himself has a risk fund at the start, with which he invests in companies that operate in this area. "The virtual world and the real world will merge in the next five to ten years. This is really a five or ten year bet and a really fascinating one," said the expert. However, he advises making many small bets, as it is currently not possible to predict who will ultimately emerge as the winner in this segment. "But if I were given a million that could be worth tons of money in 10 years, I would invest it in this area."