Lorenzo Vangelisti is an authoritative voice in the analysis of market changes. In an interview published by “Citywire” in January 2019, he addressed the profound changes affecting the financial markets in that period. “The past six months have seen a shift in market sentiment. In particular, investors’ perception towards the global economic performance has changed. All risk appetite indicators have dropped significantly – much more than in February 2018 – and the average positioning of investors’ portfolios has become very conservative”, Valeur Group‘s CEO pointed out. At the same time, “economic data remained encouraging, especially in the United States, and this resulted in a division between the real macroeconomic situation and investors’ expectations”.
Lorenzo Vangelisti analyzed its impact on 2019: “Our view is that we have a window of high volatility which has begun, and this new phase is due to last at least for the first 6 months of 2019”. In this perspective, according to Valeur Group’s CEO, volatility may represent “an opportunity to generate returns, if managed effectively”: in order to obtain results in this scenario, it is therefore necessary to take “a dynamic and expert approach to portfolio allocation”. Secondly, “we need advanced risk analysis and management processes, which make it possible to seize market opportunities with strategies that are less conventional and less related to the performance of individual markets”.
As explained by Lorenzo Vangelisti, Valeur Capital provided a timely response: “It carefully analyzed and decided to apply new management techniques, in order to expand the range of investments and tools available to face this new market phase. Moreover, the company also increased the quality of portfolios to reduce their volatility. One of the goals is to have portfolios which can seize opportunities in different asset classes, when valuations reach extremely attractive levels”.
In this perspective, various strategies were adopted: “Positions and investments were introduced with the aim of generating positive returns exclusively with movements in relative valuations between bonds, while market risks and risks related to the economic cycle were covered. Furthermore, we invested in solutions that generate returns when the realized volatility increases, for example by purchasing hedging positions in markets where volatility is still low. Valeur also launched new strategies and strengthened the skills of its portfolio management team. In particular, the “Hybrid Credit” strategy aims to generate positive returns from subordinated bonds issued by banks, while limiting the risk deriving from the equity component”. Finally, as Lorenzo Vangelisti emphasized in the interview, Valeur decided to “generate returns through an active approach, taking positions when markets reach extremely positive valuations, as occurred, for example, between October and November, when the Group took a long position on the Italian government bonds”.
