Investment Committee – November 2023
A forward-looking approach
The Investment Committee convened in November 2023 to discuss strategic decisions for the upcoming period and to review the current investment landscape. The meeting was characterized by a forward-looking approach, focusing on market dynamics and the potential for alternative investment strategies.
Emphasis on Market Information Flows
The Committee observed that financial market information flows are increasingly providing more predictive evidence than traditional macroeconomic data. The importance of capturing significant market moves based on short-term technical characteristics was highlighted, with an emphasis on the potential impact on the aggregate portfolio.
Derivatives as an Alternative Positioning Tool
A shift in perspective was discussed regarding the use of derivatives. The Committee sees value in utilizing derivatives not only for hedging but also as a means to achieve outperformance through strategic positioning. The potential for enhanced returns through options, even when making correct underlying asset choices, was noted.
Factor-Based Investing Over Asset Classes
The Committee deliberated on the concept of focusing on investment factors such as growth/value, trend/mean-reversion, and high-dividend, rather than traditional asset classes. High-dividend equity investments were specifically examined, with recommendations for UCITS exchange-traded funds being made for client portfolios.
US Dollar as a Risk Gauge
The US Dollar’s role as a risk indicator for global markets was briefly discussed, with the Committee favoring a market price rebound and a corresponding weakness in the US Dollar for November.
Upcoming Analysis on the Greek Stock Exchange
The prospects of the Greek stock exchange were debated extensively, with the Committee agreeing to dedicate a full analysis to this topic in the December meeting.
Fixed-Income Investing and Bond Price Action
The Committee reviewed the recent pressure on bond prices and reaffirmed the decision to maintain low duration exposure in portfolios. The view that bonds may continue to face selling pressure was expressed, along with the expectation that regulators may intervene to prevent severe price declines.
Summary/Conclusions
The Committee’s discussions in November 2023 reflected a strategic pivot towards leveraging market information flows and alternative investment strategies, such as derivatives and factor-based investing. The Committee remains vigilant in monitoring market trends and is prepared to adapt investment strategies to navigate the evolving financial landscape. The upcoming analysis on the Greek stock exchange and the ongoing assessment of fixed-income investments will be critical focal points in future deliberations.
Authors: John Couletsis and Kostas Metaxas