Managers of a multi-asset portfolio can use the full breadth of the capital market as part of their capital allocation. In addition to equities and bonds, investments in commodities, precious metals, derivatives and in new asset classes such as cryptocurrencies are also possible – as long as investment conditions allow. In view of record inflation, bouts of volatility and the omnipresence of various coins and tokens in the media, GANÉ is regularly approached about investment alternatives beyond equities and bonds.

In the case of gold and derivatives the focus is usually on hedging and short-term return opportunities dominate the discussion in the case of cryptocurrencies. Instead, GANÉ focuses on a clearly defined investment-process that has been tried and tested over many years, in which a down-to-earth investment philosophy is at the forefront, irrespective of momentum, temporary euphoria and media presence. The basis for this is provided by an in-depth fundamental analysis based on cash-flows. In this context, company shares are viewed as equity-bonds and yields are compared with classic debt-capital-bonds. They represent two sides of the same coin. A cash flow-oriented approach and the determination of a time-weighted return allow for a comparison of investments in both asset classes. For this, however, it is necessary that a high degree of predictability and security of the cash-flows prevails. Thus, GANÉ invests in “winning companies” with high free-cash-flows in the equity sector and in the “financial stability” of a company or a state in the case of bonds. At the same time, risk-taking must be adequately rewarded. GANÉ is not concerned with relative but absolute returns – ten percent per year for shares and six percent per year for bonds must be achievable in order to enter long-term investments. This implies a countercyclical allocation of capital and the maintenance of a variable quota of liquidity in order to counter any volatility spikes that lead to over- or under-valuations in the stock market.

Predictable cash-flows and comprehensible return expectations are neither discernible with gold, cryptocurrencies or complex derivative structures. Therefore, these asset classes continue to play no role for GANÉ. Instead, GANÉ focus is on equities, bonds and liquidity.

Marcus Huettinger Capital Markets Strategist