Investments in turbulent times

Corona crisis brings challenges for investors and portfolio managers

Insurance & understanding, 24.04.2020

The capital markets are currently subject to enormous uncertainty and investors are seeking orientation. We spoke to Anke Schaks, Head of ERGO Investment Products and Managing Director of MEAG, about the current challenges and the situation on the capital markets.

Anke Schaks, Head of ERGO Investment Products and Managing Director of MEAG

Anke Schaks, Head of ERGO Investment Products and Managing Director of MEAG

Miss Schaks, how do you rate the current situation?

After a brilliant start into 2020, the priorities have now understandably shifted.  Health comes first – for all of us, including our sales partners and their families. We have contact restrictions and extensive limitations in the professional environment in all German states. Measures that are important and essential for containing the coronavirus. Therefore, we all do not know yet when the personal contact restrictions can be eased. 

In addition, we have capital markets that are highly unsteady. This brings many challenges – both for us as investors as well as for portfolio Managers.

What are the most important questions from the investors' point of view?

I am aware that our clients have many questions and are quite rightly asking themselves: What is the way forward? Are we over the hill or will we continue (in steps) downhill? What do I do with my investment in investment funds?

At this stage, no one can answer the question of what to do next with certainty. Because the further development depends on various factors. For example, when the spread of the coronavirus can be contained. As soon as this is the case, the restrictions on contact may continue to be eased. This will then lead to a normalization of our everyday life and eco-nomic activity. The duration of this state aside from our normal life determines the extent of the effects on the global economy and therefore the effects on the global stock markets.

The good news is that we will return to normality. This will also stabilize the situation on the capital markets. For the reasons I have just mentioned, the timing is not predictable.

MEAG investment funds are well diversified, which means that the risk is broadly spread. It is also important that investors choose their funds according to their risk/reward profile.

My impression is that the vast majority of our investors have so far remained levelheaded and that many of them are thinking long-term, over ten, twenty or even more years. This has also proved its worth in the past – after the financial crisis in 2008, we experienced a very long upswing. 

Miss Schaks, from the perspective of your function as Managing Director of MEAG: Can you give us an insight into how MEAG is operating these days?

MEAG's colleagues are now also working from their home offices without any limitations. IT has done an outstanding job in the last few weeks so that MEAG can also work as usual.

In terms of content, the high price fluctuations show that the markets are having difficulties in correctly classifying the situation. Such a market situation offers its very own challenges – fast markets, what is the right price? Can I find a buyer for the positions I want to sell? These are among the questions that MEAG's Portfolio Managers have been confronted with for several weeks now.

While the news is currently often negative, there is also sometimes a day when positive news dominates: The extensive government measures to soften the impact of the economy, for example. For our Fund Management team at MEAG, this means long working days in which we are constantly rethinking and discussing new ideas: What happens next? Are we positioned correctly? Our Fund Management constantly updates its market opinion. As is currently the case in politics, careful action is essential here too. But without ever losing sight of the big picture.

Our globally positioned Fund Management is very active and can exploit the full potential of the worldwide capital markets. Many specialists complement each other to form a large, broad-based team. In my opinion, this is the big advantage for private investors: high competence, close cooperation, best results possible.

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