Whilst low interest rates were accepted as a necessary evil in 2009 in order to stave off the threat of financial meltdown, there are today increasing concerns that they cause more problems than they solve. The debate has turned to the issues which low rates pose for savers.
Active multi-asset investors faced a hard year in 2016. Total returns from multi-asset funds were markedly lower than in the preceding years and hardly any of them managed to outperform their benchmarks or passive, low-cost peers. As a consequence, the year-long strong net inflows into multi-asset funds abated.
US stocks continue to outperform Europe
- The Commerzbank US Risk Premia Rotation Index (CBKIRPRU Index), which monitors the behaviour of a global macro risk indicator to select either defensive risk premia indices (MSCI USA Quality and MSCI USA Min Volatility) or bullish risk premia (MSCI USA Value and MSCI USA Momentum), has vastly outperformed our CBK Europe equivalent in the past 12 months
- The index has risen in value by 18% year-on-year, whereas the Commerzbank Europe Risk Premia Rotation Index (CBKIRPRE Index) is up 8.7%
As was the case in the last few years, the gold price saw gains at the beginning of the year thanks to ETF inflows. These gains can be explained by the many political unknowns in the US and in Europe. US President Trump’s policy causes uncertainty, and in Europe important elections are due in several major countries, which could put the EU and the eurozone to a test.