The yellow precious metal will generate a higher average return than equities in the current year. At least that is what independent asset managers in Switzerland expect.
While equities have long been regarded as the traditional asset class offering the highest returns, this is no longer likely to be the case in 2020. Independent asset managers in Switzerland expect the price of gold to rise by an average of 5 percent, while they anticipate a mere 4 percent increase in the value of equities worldwide. The majority of them do not believe that bonds denominated in Swiss francs will make any great leaps (cf. graphic).
This is according to the latest Aquila Asset Managers Index (AVI), published by the Swiss Aquila Group every three months in cooperation with finews.ch published. The index summarizes various forecasts from independent asset managers in Switzerland. Almost 160 firms took part in the latest survey.
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Swiss asset managers expect stock market prices to rise significantly over the next three months (59 percent of respondents in the SMI, 58 percent in the EuroStoxx50 and 57 percent in the S&P500) (cf. graphic).
These expectations make asset managers generally optimistic. A total of 41 percent of survey participants expect business to develop positively or even very positively over the next twelve months; 48 percent anticipate stable development.
Under these premises, a quarter of the asset managers surveyed intend to hire additional staff, as the current survey further reveals (cf. graphic).
A look back shows that 2019 has already left a positive mark on the books of independent asset managers. The encouraging price performance on the financial markets not only led to an increase in assets under management for 65 percent of respondents, but also to a significant increase in new money for 36 percent of survey participants. Good market performance was also important for growth for 43 percent of asset managers (cf. graphic).
In three months, Swiss asset managers see the SMI averaging 10,606 (previous quarter: 10,017), gold at a good 1,505 (previous quarter's expectation: 1,538) dollars an ounce and the euro at 1.09 (previous quarter: 1.08) francs.
The next AVI Index will be published in April 2020.
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Independent asset managers in Switzerland are currently facing a difficult market situation. Many assets are proudly valued after the bull market in the current year, while at the same time the geopolitical fragmentation of the world does not make it easy to make the right investment decisions, as the latest edition of the AVI Index shows.
Independent asset managers in Switzerland are unanimous: local banks are threatened by overregulation, the US economy is overestimated on the stock market, and now is a good time to dry up profits.
In Switzerland, consumption remains the mainstay of the economy, while foreign trade is slowing growth. Inflation is close to zero.
Germany has probably overcome the recession and moderate growth of 1.3-1.4% is expected for the coming years. The EU-US trade agreement further improves the outlook.
In the USA, the figures are contradictory and a shutdown is looming.
The SNB and ECB are keeping their key interest rates unchanged at 0% and 2.0-2.4% respectively. Forecasts point to a slight rise in inflation.
The Fed is continuing its cycle of interest rate cuts due to weaker labor market data and probably also political pressure. Further interest rate cuts are expected.
The mood on the global bond markets is calm and yields are barely moving.
The most important stock markets remain close to their highs as market breadth declines. Individual technology stocks are coming under pressure.
The decline of the US dollar has been interrupted, but further weakness could follow in the medium term.
Gold reflects the loss of confidence in the US dollar.
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