As in June 2008, when we met in Santander, we met last year in Amsterdam for our usual InFormation Course, already concerned but still unaware of how bad the incoming summer would be.
The incoming summer does not look very promising either for institutional investors, first of all, who attended the Budapest conference in record numbers, and also for our friends in Emilia hit by a series of earthquakes. We have dedicated this 8° Course, in solidarity, to them and to the people of Aquila still suffering from the consequences of the 2009 earthquake!
The title of the 2012 conference, chosen as usual in October of the previous year, has inspired many other conferences and articles. Nowadays, it may seem a bit overused, but that is wrong: nobody has understood the key point that we tried to make through our discussion in Budapest!
Pure market risk today can be eliminated only by accepting a zero short-term yield, in nominal terms, and negative in the medium-long term, in real terms. “This is not a country for investors!”
The reference to the disappearance of the “risk-free asset” of portfolio theory is, therefore, reductive with respect to the overall disappearance of investment categories able to shield investors from the different types of risk that we have discovered during the crisis and now we try somehow to measure: liquidity, credit, counterparty, operational, reputational…
The recent changes in the self/regulation of investment policies and processes, anticipated and discussed last year in Amsterdam and now largely known, explicitly introduce for the first time a factor of risk, both operational and reputational, which Prometeia Advisor has long been flagging to institutional investors, their Trade Associations and Supervisory Authorities: the “financial advisor risk”.
Now specific legal and regulatory references are available:
Now that the rules are clear and difficult to fudge, we anticipate the demand for professional investment advisory services to be increasingly well-informed and also specifically focused on supporting specific activities within investment processes increasingly articulated and internalised in the organisational structures of the investors. The “levelling of the playing fields” from the offer side, with the demand for authorised operators acting as catalyst, will produce a competitive market with reliable and qualified operators, selected on the basis of the quality/price ratio.
As in previous years, a summary of the discussion at the conference can be found in the special issue of the newsletter Anteo.