César Pérez Ruiz shares his “3 on the 3rd” for March
1. Defensive growth
Just as the world started to emerge from the two-year long pandemic, the European continent is now grappling with an arms conflict in the wake of Russia’s invasion of Ukraine. Uncertainty is now in the minute-to-minute rather than day-to-day. Oil has already rocketed above USD100 per barrel while Ukrainian and Russian assets have plummeted. Central banks will certainly be influenced by these events in their monetary policy decision making. We can expect an extended period of elevated volatility and will continue to consider it as an asset class. In this context we will also look for buying opportunities among defensive growth companies, such as within the heathcare sector or Swiss equities.
2. Macro hedge fund strategies
In light of elevated volatility levels, we continue to believe in the potential of actively managed macro hedge fund strategies that take positions on fixed income, currency and equity markets to generate alpha. Macro managers could be well placed to navigate the geopolitical volatility as the current environment creates opportunities for these managers to make investment choices based on diverging economic and political outlooks across countries. This coincides with our Who pays the bill? investment theme for 2022.
3. The new Marshall plan
If Europe’s economic growth deteriorates as a consequence of the Russo-Ukrainian war, discretionary fiscal stimulus could be deployed to support those countries reliant on Russian gas and the continent’s green spending commitments through implementation of the EU funds. We are already seeing renewed commitments from European governments to accelerate their digital and renewables investments (including nuclear) and increased defence spending.