Corona – the black swan of the financial markets?
Interview with Dr. Peter Andres, CEO of Signal Iduna Asset Management GmbH
European Business: Dr. Andres, what is the core business of Signal Iduna Asset Management?
Dr. Peter Andres: We are the financial heart of Signal Iduna. We were founded in 2003, to accumulate the financial know-how of the group. Of course, we have also expanded our business field over recent years. Today, we manage most of the group’s assets, offer public funds, and have established advisory mandates. We work exclusively for the Signal Iduna Group.
European Business: Could you give us some examples of typical products.
Dr. Peter Andres: Hansa Invest Smart Select E is one of our flagship products. It is a defensive, minimum-risk stock product, based on a minimum-day-at-risk algorithm with a correspondent pre-filter. We have been achieving massive outperformance with Hansa Invest Smart Select on the Eurostock Index for years. In times of volatile markets, when we saw downturns of around 60% maximum, it fell too, but it always compensated with upsides. We managed to lower the volatility of the product towards the stock market at 30 to 35%. As a result, insurance companies can nominally include more stock products than for a passive ITF product. Another best-in-class product is our Hansa pension special. This is a rather yield-oriented product, based on investment grade ratings with investments in subordinates. We invest 80% in corporates and only 20% in financials. The Hansa pension special achieves an attractive coupon with controlled risk and is a reasonable portfolio addition.
European Business: What is the focus of your portfolio?
Dr. Peter Andres: A major part of our portfolio consists of bonds, inscribed stocks and government bonds – long-term products for which we carry out the so-called ALM-matching with the insurance companies. We try to find loans which match the passive structure of the insurances and their risk-structure. We do not focus on Germany exclusively, but search for government bonds all over Europe, in order to achieve a reasonable duration matching for the passive side. Of course, we utilize highly differentiated analysis tools and processes, and check every loan several times.
European Business: Which technologies and industries will be important for you in the future?
Dr. Peter Andres: It is difficult to forecast the development of the different industries. Many of the traditional areas for which Germany is known may no longer be focal industries.
European Business: At the moment, the markets are flooded with huge amounts of money coming from different sources. Do you think the EU took the right decision, and are you satisfied with the effects?
Dr. Peter Andres: All central banks are opening their maws at the same time. Of course, you must set an example in times like these. But it seems, we are not able to find the way back. The markets’ expectations keep rising while, at the same time, the benefit is decreasing. In the medium run, this might cause inflationary tendencies. Right now, the velocity of money is falling. If it starts rising, we will have inflation. At the moment, the stock market does not react to corporate news anymore. What matters is if the central banks are releasing new support packages. The situation is extremely difficult for investors, too. As soon as the crisis is over, you will have to withdraw money from the markets.
European Business: What do these developments mean for your business?
Dr. Peter Andres: Every financial asset is more complex. The advantage, for example, for the insurance companies is that you benefit from a long-term secured yield. In fact, you buy an already existing return. As soon as the yields start rising again, you will also benefit from new assets. Thanks to the extremely wide diversification, you can get a best-of-report portfolio including many different types of asset categories, which you would not normally get. As a result, the pressure on asset management companies is high.
European Business: Which other changes and effects do you expect due to the corona crisis?
Dr. Peter Andres: The corona-crisis is the ideal starting point for changes. During a double-dip recession, you must carefully analyze which business models can be kept alive in the long run, and which conditions you need to invest in these business models. We must not reactivate the apparently dead.
European Business: Dr. Andres, thank you very much for the interview.
Interview: Manfred Brinkmann