The year 2020 saw global financial markets being severely hit by Brexit negotiations, the US presidency elections and most of all, the COVID-19 pandemic. Funds positioning and asset allocation are adaptively being re-shaped, influencing investment decisions.
BOV Asset Management recently hosted a webinar ‘Managing funds in these COVID times’, during which investment specialists shared insights on investment-grade bonds, international equities, the Maltese markets and what one can expect in the foreseeable future.
The discussion was launched by Steve Ellul, Head at BOV Asset Management who claimed that the COVID-19 pandemic not only disrupted global economies, but it also impacted the way people invest. “Strategically, when developing portfolio funds, Bank of Valletta’s approach is to seek different markets and diversify in long duration bonds,” stated Mr Ellul. He recommended that risk-averse investors should avoid majorly impacted sectors, and instead take into account qualitative factors such as management performance and sustainability.
Monetary politics drove bond yields into new lows, according to Adrian Borg, Portfolio Manager at BOV Asset Management. “We recall a time when German bonds use to leverage a return of 3% interest upon investment, whereas nowadays this decreased to lower than 1%” explained Mr Borg. He foresees that companies will continue to issue bonds to grow their capital and compensate for the depreciation of their assets.
Portfolio Managers Clayton Scicluna and Christian Buhagiar elaborated on both local and global investment situations. They stated that while Maltese government bonds are currently stable, Brexit negotiations and the US presidency elections are globally posing risk on investments. Trade between countries is still being executed, admittedly at a lower scale, nonetheless, economists continue to forecast a global economic reduction of 3.5%. The speakers concluded that the shifts in consumer behaviours and business operations such as the increase in remote workers, will ultimately transform the way people invest their funds.
A recording of this webinar can be viewed on the BOV YouTube channel.