«We remain constructive on the outlook for the coming months and overweight risk assets»
Ms. Dwek, the year is almost over. How have you experienced it personally and professionally?
It has been long, tiring and hectic but it was not all bad, especially living in Switzerland, where containment measures were softer than in many other places. And I think this year has shown our adaptability and our resilience, especially since this situation has lasted a lot longer than people originally anticipated.
What were the most difficult investment decisions for you and your team?
The toughest investment decision was adding risk back to portfolios in the spring, while there was still so much uncertainty about the virus and about the growth path ahead. Ultimately, it was not just about diving in, but gradually wading back in with more defensive plays, and then adding cyclicality more recently.
Did you expect such a rapid counter-reaction after the lows?
I don’t think anyone expected such a quick rebound, particularly on the scale we witnessed in the spring. That said, we did believe that markets would find a bottom as cases started to plateau and thanks to concerted monetary and fiscal support.
What do your models promise for the coming months?
We remain constructive on the outlook for the coming months and overweight risk assets. We also believe that the rotation towards more cyclical sectors has further to run, though it might not be in a straight line, and it might not last for all of 2021. We do keep an eye on positioning as this is a very consensus view and sentiment has turned quite bullish. Still, there is plenty of upside left.
In short: what is the greatest opportunity and where is the greatest danger?
We still like equities and see many opportunities within. We also think Emerging Markets hard currency corporate debt offers attractive spread compression possibilities. The risk is more political in our view, but it would spill over into markets. That is, if we do not get fiscal stimulus in the US (or in Europe for that matter), we could see a correction. Obviously, any big vaccine hiccup would also hurt sentiment.
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Esty Dwek is Head of the Global Market Strategy Department, based in Geneva. She and her team are responsible for developing and communicating market research, macroeconomic views, investment ideas and asset allocation positioning, as well as long-term return assumptions. These views assist in investment decisions in the portfolios of the Solutions Group. Dwek has more than 14 years of experience in the financial industry. Prior to joining Natixis Investment Managers in 2016, she was a global strategist in the Emerging Markets team of Loomis, Sayles & Company, where her responsibilities included the development of global macroeconomic and asset class views and asset allocation ideas. She began her career in the investment industry in 2006 at HSBC Private Bank, where she worked in Geneva, New York and Singapore and spent the last six years as an investment strategist in London. Esty Dwek holds a BA in Political Science from Princeton University.