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2020 Market Outlook
05 Feb 2020

BOV Asset Management recently presented its yearly Markets Outlook together with a Fund Focus for its suite of funds. Present for this afternoon seminar, which is now in its fourth year, were a number of BOV AM representatives from the BOV branches and Investment Centres along with other authorised financial intermediaries.

Opening the seminar, Kenneth Farrugia, CBDO of the BOV group, highlighted the important initiatives which are currently underway within the Bank, amongst which are the improvements in the IT system, strengthening of the Compliance and Risk procedures and enhancing the Bank’s visibility.

The seminar, which was held at the Salini Resort was also addressed by Joseph Camilleri, Executive Head of BOV Asset Management. He remarked that 2020 marks the 25th anniversary from the establishment of the Bank’s fund management arm which was formerly called Valletta Fund Management. He explained how the company evolved from being a marketing company promoting funds managed by third parties to what it is today, a fully fletched Asset Management company with over a billion Euros under its management. These funds are invested in the legacy Vilhena Funds, the recently introducted BOV Investment Funds and the Portfolio Management Service offered to Institutional Clients. Camilleri said that during the last year, the company strengthened its resources in the Asset Management and Compliance section, the latter being fundamental to keep the company compliant with ongoing regulations in all fields of the industry.

Steve Ellul, Head, Asset Management gave a thorough explanation of the key themes that are expected to have an impact on financial markets in 2020. He highlighted the fact that the major drivers of global asset classes are now evolving and as such asset allocations need to reflect these changes. In this context, Steve explained that many central banks have practically exhausted their monetary policy toolkit and as such one should expect further pressure to pile up on government to support economies from a fiscal perspective. Trade-wars and Brexit related concerns are seen slowly dissipating as the US election approaches and the UK is steering away from a no-deal scenario. He also explained how inflation expectations are generally low and so is the volatility on the EUR/USD pair. Steve also explained the general outlook on the Maltese equity market and how different segment of this market are expected to behave in the current economic conditions.

All advisors were then directed into 4 different break-out sessions where all attendees were able to have a focused update on the BOV Portfolio Funds, Vilhena Local Funds, Vilhena European Multi Manager Funds and the Vilhena Income Funds.

Adrian Borg and Glen Mifsud dealt with the timely and rational decisions which, together with exposures to particular sectors, have been instrumental for the BOV Portfolio Funds to register all-time high performances and outperforming nearly all its peers.  Looking ahead to 2020, they emphasised that sectors such as IT and Aerospace & Defence are being preferred in view of their historical correlation with the Eurozone PMI. Inflation linkers are currently pricing at very cheap valuations due to lower inflation expecations in the past years and will also be introduced in these funds.

Clayton Scicluna and Stephen Sammut gave a thorough explanation of their views on the local bond and equity market and how this can effect the positioning in the local funds. They explained how all Maltese securities are vetted from both a fundamental aspect but also from a market sentiment approach. This is done to ensure sound investment and the capturing of performance opportunities. Clayton explained how duration management is key for the determinant of performance in the local sovereign debt whilst Stephen highlighted the value achieved through detailed credit analysis in the corporate bond market.

Christian Buhagiar delved into the multi-strategy approach being adopted in the European multi-manager fund and how this is providing added value to the clients through lower costs and improved performance. He explained how momentum indicators such as trend measurements and sector rotation create synergies when blended with top-down fundamental views. On her part, Loredana Vella went through the key features in the high-quality and high yield bonds funds run by BOV Asset Management. She explained the views of the sub-investment managers and how performance is being generated despite the persistent low-yield environment in the fixed income space.

Issued by BOV Asset Management Limited, 58, Zachary Street, Valletta, VLT 1130, Malta. Tel: 21227311, Fax: 22755661, Email: [email protected], Website: www.bovassetmanagement.com.mt. Source: BOV Asset Management Limited’

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