Financial markets are driven by both global and local factors. For the global economy as a whole, the influence exerted by emerging markets, most notably China, is becoming ever more important. Besides the economic cycle, medium and longer-term themes and trends are important factors determining financial-market returns.
Macro-economic trends are the most important element in our investment strategy. We provide analyses and forecasts for the short term (6-12 months), the medium term (3-5 years) and the long term (10-20 years).
In addition, we systematically use valuation models to assess whether opportunities or risks currently have the upper hand in a given market. The models we use include Taylor rules for monetary policy, inflation-based equilibrium models for bond markets, purchasing-power parities for exchange rates, and equity-market models based on fundamentals and investor sentiment.
Our asset allocations are driven by our
assessment of the outlook - with regard to both risk and return - for various asset classes in the key regions, as well as by clients’ preferences, long-term investment goals and levels of risk tolerance.
We select stocks using the R & A Quality Select approach. This involves systematically selecting quality companies with
positive medium-term prospects,
above-average financial ratio (R & A Financial Conditions Index),
above-average ESG key figures (R & A Sustainability Index), and
a comparatively attractive valuation based on our assessment of their fundamental prospects (using our R & A Earnings and Cash Flow Discount Model).
R & A equity portfolios are well diversified among regions and sectors.