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2018 analysis and outlook for 2019

Category : News

Publication date : 28/01/2019

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Let’s start by looking back at 2017. That year, the ability of our algorithms to favor investments in leading markets, associated with stable financial markets and a dynamic economic context, enabled us to deliver good performances and encouraging results.

But from the first weeks of 2018, the market trend reversed.

The context

The European stock markets finished the year showing losses in excess of 14%. In the rest of the world, Chinese, Turkish and Argentine stock markets followed a similar trend, and respectively dropped 25%, 45% and 50%. In the United States, the losses have been limited to 1,60% but the markets were subject to high volatility. On one particular trading day in February 2018, the Dow Jones lost up to 6.5% of its value.

In such market conditions, diversification is normally the answer. But last year, even this tactic didn’t work out. Normally, bond prices and stock prices move in opposite directions, which allows a diversification of the risk. But this strategy turned out to be ineffective in the second half of 2018. Indeed, as the bond markets declined, stock markets dropped even further. At the same time, gold prices fell 4% and US Treasury bills showed a negative return. In addition, oil prices sank 40% from the beginning of October. So, it became quite a challenge to navigate this global downturn …

Actions taken by Birdee

Facing this turmoil, our Investment Committee remained cool-headed. It rationally and responsibly adapted our risk management allowing us to steer into smoother waters.

Our investment committee also decided to start rebalancing our portfolios in order to find new investment opportunities. This operation has been conducted carefully: only one rebalancing has been performed during the second half of 2018.

In May 2018, we extended our products offer by introducing a range of socially responsible investment portfolios enabling our clients to invest in favour of a better world, while still benefiting from the Birdee management services and the same risk/ return trade off profiles underlying our standard portfolios. Our SRI portfolios consist of funds whose issuers have committed themselves to value good practices that meet environmental, social and governance criteria.

Birdee in 2018:

Market outlook for 2019

Some of the major issues of 2018 are still current. So, we must remain vigilant with regard to certain events such as the trade agreement between the United States and China, Brexit, the global European economic and political situation, … We must continue monitoring the intrinsic nervousness of the stock markets which may lead to sudden and instinctive reactions. But it is not all gloom and doom. The emerging markets, some of the industry sectors, mainly the ones focusing on sustainability, and certain commodities, reflect a more optimistic perspective.

We also want to point out the mechanical effect of the institutional investors: many withdrew from the markets as performances were generally declining. This snowball effect has exacerbated the decline of listed shares. We therefore have reason to hope that the markets will regain some stability in the first half of 2019, when the institutional investors will once again take their usual positions.

Our main initiatives for 2019

Our Research and Development teams are continuously working to improve our tools and algorithms in order to provide you with an improved customer service. This year, we will put in place a more advanced version of our seismograph to capture more relevant and accurate warning signs about the possible risks of market crises.

The Birdee team is working on a large number of developments that will make your life easier in terms of savings, investing and tax-related matters. We will also offer you a host of new functionalities: you will be able to make recurring payments, open an account directly from your smartphone, select life insurance contracts … Data access security will also be enhanced and reinforced.

From the start, our ambition has always been to turn your money into a support for a better future, – not only yours and the one of your relatives and most beloved ones, but of our planet as well. We also want to allow more people to take back control over their money. This is our commitment to you. And we are happy to reiterate it today!
Any issues, please let us know. We will provide you with all the additional information you need.

The Birdee team