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Currencies as part of a long-term investment strategy

Defining and managing a global portfolio’s currency allocation is a key factor in driving long-term risks and returns. In our consulting practice we often find that our clients (and the banks and asset managers that advise them) do not pay enough attention to currency exposures or, alternatively, focus too much on short-term considerations and market timing of exchange rates. onValues does not believe in short-term market timing and supports clients in defining a global currency allocation that is in line with their risk/return profile and is part of a truly long-term investment strategy. As an input, we use different approaches based on long-term scenarios and macro-economic indicators. We are critical of commonly used approaches based on currency allocations of global benchmarks such as MSCI’s World or All Country World indices, given the fact that many global corporations generate more revenues abroad than in their home country. In addition, onValues provides an ongoing monitoring of currency markets informing clients of likely major market dislocations. This, in turn, is an input for revising the client’s long-term currency strategy or for measures aimed at reducing downside risk.

Investing in sustainable agriculture and food

In the past months onValues has increased its research activities focusing on investments in sustainable agriculture and food systems, also based on the interest that its clients are showing for this sector. From a financial point of view, investments in agriculture are interesting because of their real assets and yield generating character. From a social and environmental point of view, investments that take positive impact and ESG into account can contribute to food security and healthy nutrition, and reduce risks related to the use of pesticides and GMOs, to water availability, biodiversity loss and climate change. In identifying and assessing investments in the space, onValues can rely on its 15-year track-record and on a network of independent specialists. In the past, onValues has facilitated investor initiatives (see the Geneva conference in 2011 and the Principles for Responsible Investment in Farmland) and published proprietary research on the subject.

Can microfinance add value to a global portfolio?

Peter Wüthrich was invited to speak at Prestel & Partner’s Family Office Forum to share onValues’ experience in advising clients interested in frontier market investments. Focusing on microfinance investments, he noted that - in spite of recent challenges - they can contribute to better diversification and alignment to family values in the context of family office portfolios. After giving an overview of the market and of the main market players, many of the family office managers in the audience were surprised to learn that some of the pioneers of microfinance investments are Swiss-based and offer a wide range of public and private investment funds with substantial assets under management.

Peter stressed the fact that investing into microfinance requires a long-term investment horizon and that past performance should not be the driving selection criteria for choosing a fund manager. A thorough evaluation of aspects like geographic focus, diversification, currency exposure and the fund’s investment process should be an integral part of the investment decision.

How the passion of high-net worth investors drives impact investing

The past months have seen an increasing number of private wealth-holders going public with their engagement for integrating social and environmental aspects in their investments. An article by the Financial Times portrays Justin Rockefeller and other young members of historic dynasties that are taking their family offices into a new era of investing in line with their values. Annie Chen, a long-time onValues client, was portrayed in an August article in Barron’s and a Huffington Post blog in September. Ben Thornley, the author of the blog, notes how passion drives this new generation of investors and that “..institutional investors looking to high net worth individuals to shoulder the early-stage risk of impact fund managers, and for advisors to high net worth clients, understanding why and how the wealthy make impact investments is essential”.

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News

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