Michael Schütze, Country Head Schweiz AllianzGI

Michael Schütze (Image: zVg)

How do you see the role of asset management in an environment of persistently low interest rates?

Over the past decade, which has been marked by several crises and a long period of negative interest rates, asset management has proven its strength. With illiquid alternatives, the private markets, it has opened up a new asset class for investors with which investors have been able to generate the returns they need or want even in the challenging interest rate environment. From this point of view, asset management is a partner for customers in every market situation.

Which new investment strategies are gaining in importance?

As a result of the negative interest rate phase, there has been a global trend away from bonds and towards investments in real assets – in addition to equities, illiquid alternatives/private markets in particular. As a result of the normalization of interest rates, the pendulum has swung back somewhat: bonds are yielding positive returns again. Nevertheless, the following still applies: It's the mix – now Swiss multi asset – that makes the difference.

With regard to Swiss customers, it is important to keep an eye on their home bias. The multi-asset solutions for Swiss clients differ from those for clients from the euro area: they place a greater emphasis on Swiss issuers. For this reason, Allianz Global Investors has recently expanded its multi-asset capacities in Zurich.

«With blockchain we are in a temporary phase of disappointment»

We continue to see thematic strategies as well as India as investments, especially on the equity side.

To what extent are technological developments, especially artificial intelligence and blockchain, changing the asset management industry?

It is well-known, the short-term consequences of technological innovations are often overestimated at first, but are underestimated in the long term. . This then leads to a euphoria-disappointment cycle. With artificial intelligence (AI) we are currently still in the euphoria phase, with blockchain perhaps more in a temporary disappointment phase, after its penetration is not as fast as some initially – perhaps exuberantly – suspected.

In our view, both will have serious long-term implications for all areas of human life, including asset management. AllianzGI is already working on both in many areas of the company, including portfolio management. However, we are convinced that, in the long term, it will not be a choice between man or machine, but rather a partnership of man and machine.

What opportunities and risks do you see in the increasing importance of passive investments compared to active investment strategies?

We are convinced that both active and passive asset management have their right to exist. In the long term, there will be no either/or. It should be emphasized that new investment segments can only be actively invested at first. In addition, the market dominance of passive investments entails certain risks for financial stability: the information power of stock market prices decreases, there are liquidity and concentration risks. The latter can currently be seen impressively in the high weight of the so-called «Magnificent Seven» in common US stock indices.

Allianz Global Investors is and will remain an active asset manager by conviction. And we understand «aktiv» not only in terms of outperformance, but also as active in advising and supporting clients as well as exercising voting rights for clients.

How does the regulatory landscape – such as MiFID II and other regulations – influence the development of asset management?

The number and density of regulatory measures have increased sharply over the last decade. This entails considerable implementation effort for all asset managers. Any regulation that eliminates ambiguities, promotes the goal and, also very important, whose implementation is uniform internationally – or at least in Europe – is to be seen as positive.

«Alternative investments represent a real diversification opportunity»

On the other hand, it always becomes problematic in the case of unintended consequences, when regulation gives rise to new room for interpretation or ambiguities, or when implementation varies from country to country in terms of time and content.

How do you assess the trend towards alternative investments, especially in the areas of private equity, real estate and infrastructure?

In an environment of low interest rates, alternative investments have proven to be a real boon for many regulated investors. This is because it allowed low- to non-profitable bond investments to be partially replaced without having to hold too much risk capital, with maturities that accommodate many institutional investors. This asset class thus represented a real diversification opportunity. For this reason, too, it is gratifying that this asset class is now also open to private investors in Europe, with the help of the European Long-Term Investment Fund, or ELTIF for short.

What role will portfolio personalization and the use of robo-advisors play in the future of asset management?

Personalization of portfolios and the supplementation of classic investment advice with powerful tools are commonplace. Allianz Global Investors has been working closely with distribution partners for a long time with both in mind and is jointly developing applications for customers.