Is multi-asset investing simply about putting all of one’s eggs in the same basket?
Q1 2018 started with an unexpected improvement in equities led by tech stocks performing well, despite higher interest rates and decreasing equity risk premia, while bonds fell sharply and briefly. A volatility spike in early 2018 was followed by a deleveraging of risk parity strategies forcing bonds and equities to fall at the same time, thereby changing the stable negative correlation between bonds and equities to a positive and unstable one.
Multi-asset investors realised suddenly that all their eggs were in the same basket and their portfolios suffered a loss at a scale that was last seen during the 2009 global financial crisis.
This year we saw how quickly and abruptly the relationship between assets and equities relative to bonds can change, causing diversified multi-asset portfolios to lose their diversification benefits and low P&L volatility.
A solution to multi-asset investing is to incorporate a wider range of tools and instruments to hedge the risks. Societe Generale provides volatility trades in rates, equities and FX using variance or volatility swaps, forward volatility and fund value adjustments to effectively hedge the risks embedded in your portfolio construction.
Find out how to make Markets work in your favour through the expertise of our Global Markets team, for all your investment and hedging needs*.
(*The value of your investment can go up or down)
Contact one of our experts
Managing Director, Global Head of Flow Strategy & Solution, Financial Engineering
Kokou Agbo-Bloua leads a global team of 20 financial engineers focused on the generation of differentiated trade ideas, unique implementations and hedging solutions across asset classes for hedge funds, global macro, asset managers and institutions.
Kokou joined SG CIB in 2014 and was most recently Head of Equity & Derivative Strategy Europe at BNPP in London for 4 years, where he was responsible for European fundamental equity strategy, derivatives parameters, global cross-asset themes and convertible bonds strategy. He was team leader of five senior strategists ranked #1 for idea generation by Greenwich survey & Derivatives Intelligence. Prior to this, he started his career on the trading side: Executive Director at JP Morgan from 2009-2010 and from 2000 to 2008 he was a portfolio manager at Goldman Sachs Principal Strategies (GSPS). He managed directional long/short, convertible bonds and volatility portfolios across asset classes.
Born in Togo and educated in China, where he spent 12 years of his life, Kokou Agbo-Bloua graduated with an MSc in Management from HEC School of Management in Paris in 2002, and completed his post-graduate studies in Finance at the Anderson School of Management at UCLA. He is frequently quoted in the financial press and is a regular guest speaker on the BBC, Bloomberg and CNBC.
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