What are the options for managing cash in the current environment of mostly negative interest rates? Philippe Renaudin, Head of the Money-Market team at BNP Paribas Asset Management, and Patrick Barbe, Head of the Euro Bond team, believe that it is still possible to generate competitive returns through active management and opportunistic investment strategies.
The investment environment will likely remain constrained over the next few quarters. In Europe, the ECB is unlikely to raise its key rates in 2018, but it looks set to phase out its quantitative easing policy, which will affect the money market and the bond market. We could see a steady rise in interest rates and renewed volatility. The challenge for us is to ride the re-steepening of the yield curve by employing opportunistic strategies adapted to this environment. Investors will need to adjust their portfolio allocations to these new market conditions.
