{"id":37643,"date":"2014-10-22T07:33:59","date_gmt":"2014-10-22T05:33:59","guid":{"rendered":"http:\/\/beta.next-finance.net\/strategie\/close-your-eyes-and-buy\/"},"modified":"2019-12-30T23:08:47","modified_gmt":"2019-12-30T22:08:47","slug":"close-your-eyes-and-buy","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/strategie\/close-your-eyes-and-buy\/","title":{"rendered":"Close your eyes and buy"},"content":{"rendered":"

Search for yield<\/h2>\n

For Europe, the technically driven credit-supportive environment continues to persist thanks to the
\nECB\u2019s pledge to grow its balance sheet substantially. At the same time, in the US business and credit
\ncycles are already at a more advanced stage. This leads to higher leverage of corporate balance
\nsheets, and this is not limited to the US alone. Still, Central Bank purchasing is the dominant factor
\nthat supports asset prices. Even with the Fed withdrawing, on an aggregate level global central banks
\nstill inject more liquidity. The party is not over yet. We stick to long positions for investment grade and
\nhave also moved to long beta for high yield after the sell-off this summer. For emerging corporates
\nwe are a bit more conservative and keep the beta close to neutral.<\/p>\n

\"Sander
Sander Bus<\/figcaption><\/figure>As seasoned credit investors it is in our genes to scrutinize our investments and avoid downside risk by
\nnature. Credit is about avoiding losers, not picking the winners. This attitude is still the right one to
\npursue and will generate superior returns through the cycle. This year however, it is not credit
\nfundamentals that matter. It is all about central bank policy. As a rising tide lifts all boats, central
\nbank liquidity injections are supporting all financial assets, from risk-free Treasuries to stocks.<\/p>\n

Volatility is compressed and issuer dispersion is very limited. This year you should have closed your
\neyes and bought almost everything. Although it is by no means our intention to advocate reckless
\ninvestment strategies, we believe it is smart to realize how important this technical factor still is.
\nWithout neglecting our thorough issuer screening, we think it is wise to benefit from this technical by
\npositioning the portfolios with betas that are above 1.<\/p>\n

Below trend growth<\/h2>\n
\"Victor
Victor Verberk<\/figcaption><\/figure>The US is the only region that is growing at a satisfying rate although it is still not enough to close its
\noutput gap or push up inflation. Europe is struggling and China\u2019s only way to keep growing is by
\ninjecting more debt into an already dangerously levered system. Japan is facing its own problems.
\nThe end result is that central banks have taken over and inject an unprecedented amount of liquidity
\ninto our world. And still growth remains subdued. As a result of the financial crisis the private sector,
\nin particular households, has become reluctant to borrow.<\/p>\n

Central banks: unconventional measures<\/h2>\n

Central banks continue to pursue unconventional policies. It remains to be seen what the
\nconsequences are of a reversal of such policies. At this moment the only consequence is that quality
\nyields are driven into negative territory and that the search for yield goes full speed ahead. Close your
\neyes\u2026.