Btp and emerging shares: these are Banca Generali's two winning bets. “They have been three positive months both in terms of absolute and relative performance – he says Mario Beccaria, Banca Generali's asset management manager – at the end of the year we made two strategic bets: the first on BTPs, initially on the short-term 2-year part, and then moving from time to time to maturities of 3 and 5 years, taking the increase in confidence in Italian debt; the second on emerging equity markets, from Eastern Europe to China and India, from Africa and the Middle East to Latin America”. A quarter that was also satisfying on the inflows front: total net inflows of 138 million euros in March, which confirms the growth trend of recent months and brings total inflows for the first three months of 2012 to 543 million euros, progress on the 500 million euros at the end of 2011.
La confidence in Italian debt and on Emerging markets it is also confirmed for the next few months. "The bet is still on the Btp - says Beccaria - on the equity front we are underweight on Europe, we are quite constructive on the US equity market and we are long on those emerging markets that have characteristics of growth linked to domestic demand". With attention to the Next 11 countries: all those countries which, due to their characteristics such as future growth, population and infrastructure, will give satisfaction in the long term.
YES TO BTPs, NO TO OTHER PERIPHERALS
The turbulence of these days on the Btp-bund spread which has risen to 370 do not make us reverse the Italian debt. Beccaria explains: “For those who have joined the Btp, it is utopian to think that everything has passed. For us, the goodness of government bonds remains valid, those who invest in them know that they have to endure moments of volatility. In fact, we believe that there is still value in staying in BTP relative to core European debt, a normal level is around 250-230 basis points against Germany. Furthermore, we are in a moment of no growth for Europe which means no rate hike”. However, the bet on Europe is played only on BTPs. Not only is equity underweight, but Banca Generali also steers clear of other peripherals, such as Portugal and Spain. In terms of equities, the US market is better, which at the end of the year is seen at higher than current levels: the choice depends both on the weakness of European growth and on the greater reactivity of overseas stock markets. Of course, even Europe is expected at the end of 2012 at higher levels than the current ones but gradually: and so it's better to keep it underweight for the whole of 2012. From 2013 it's another story and we'll see. But on the equity front, as mentioned, the strongest bet is on emerging markets.
CHINA, INDIA AND…NEXT-11
Emerging? China and India, Certain. In fact, Banca Generali continues to remain positive and to invest in these countries. AND also Eastern Europe: the BG Selection Sicav Eastern Europe returned 14,40% since the beginning of the year (as at 30 March) against 12,93% of the benchmark. But the new frontier is the Next 11. “These are all those countries that have certain characteristics of growth for the future, population and infrastructure such as Korea, the Philippines, Pakistan, Egypt, Mexico, Indonesia and Turkey. The beauty of this product is that we target five continents and include economies in different stages of development: Korea and Mexico are quite advanced, Indonesia and Turkey are in the middle, the Philippines, Pakistan and Egypt are in a primordial state. And it will give satisfaction in the long run”. Next 11 is an acronym invented by Goldman Sachs and Banca Generali is among the first in Europe to have launched it as a product with a fund of funds which since the beginning of the year has returned 6,54% (as at 30 March 2012). In fact, Banca Generali's management style starts with an analysis of the area on which to bet and then delegates the choice of sectors to the best skills on the market.
