Mind the Gap

CIO letter» |

September 10, 2014

The “real economy” has been struggling to catch up with the buoyant behavior of financial markets and, eventually, these diverging patterns (gaps) will have to be reconciled. On the economic side, the main global structural imbalances (a mountain of debt, a lack of aggregate demand) remain very much in place and the multiple transitions that all the major economic areas are facing are far from being completed. In this backdrop, our approach is to keep portfolios as diversified as possible while spending part of the risk budget over time to buy protection against the most unfavorable alternative scenarios. We confirm our investment strategy - long risky assets with broad diversification.

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