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The weak global economy, considerable uncertainties about the further development of inflation and interest rates as well as ongoing geopolitical risks dampen the outlook for the financial markets. Investors are therefore challenged more than ever to build a robust and resilient portfolio. "The investment environment is currently very complex. China is sending the first moderate growth signals again after the Covid reopening. In the USA, on the other hand, there is a risk of recession if the FED continues to pursue a hard interest rate course. Europe, with its export-oriented economy, is caught between these two poles," said Dr. Heinz-Werner Rapp, Board Member and Chief Investment Officer of the Bad Homburg-based investment house FERI, at the annual press conference in Frankfurt.
It is true that some global leading indicators have recently been pointing upwards again. However, it remains to be seen how sustainable this economic upswing is, especially since the major central banks are continuing their cycle of interest rate hikes for longer than previously thought. This threatens to solidify the complex stagflationary environment. The increased interest rate level is already burdening the real economy and capital markets. "Higher interest rates reduce the attractiveness of risk assets in terms of valuation. Against this background, shares in particular are not really good value at the moment, despite the massive drop in prices in the previous year, especially since profit risks are also increasing again," Rapp explained.
"In a persistently complicated market environment, multi-asset allocation with active risk management is the best approach to make portfolios more resilient," explained Dr Marcel Lähn, Member of the Board of FERI AG. Investors should therefore diversify their capital investment through a targeted selection of alternative asset classes. This strategy also paid off in the historically poor investment year 2022 and enabled FERI to achieve above-average performance profiles in investment management. The positive development of commodities and gold as well as the robust performance of hedge funds and private market investments contributed to this. "Alternative investments have proven their worth especially in times of strong distortions on the financial markets. Against this backdrop, we will continue to expand our globally oriented multi-asset approach, which we have been successfully implementing in the portfolios of our institutional investors and high net worth private clients for many years," Lähn announced. Looking ahead to the investment year 2023, FERI is sticking to a broad-based multi-asset logic, he said. "We expect alternative investments to continue to make positive contributions to returns as well as pronounced effects on risk diversification. We are therefore focusing on selected investment strategies in this area with a focus on hedge funds and private markets," said Lähn.
The FERI Group was able to cushion the effects of the significant decline in the capital markets in the past financial year 2022: Assets under management remained almost stable at €54.3 billion (2022: €56.6 billion, both in the Group). As expected, total income fell to €217 million (previous year: €275 million) due to the fact that performance-based remuneration was largely eliminated as a result of market conditions. Earnings before interest and taxes (EBIT) of €28.3 million (previous year: €79.8 million) are back in line with the long-term growth trend of the last 5 years after the exceptional years 2020 and 2021.
"Alternative investments have once again gained in importance for professional investors in the past year," explained Marcel Renné, Chairman of the Management Board of FERI AG. This area alone grew by around 20 percent to a total of €18.4 billion at FERI 2022 (previous year: €15.4 billion). FERI also recorded a significant increase in demand in the business of advising institutional investors (investment consulting). With its long-standing and broad investment expertise in the field of alternatives and its globally oriented multi-asset approach, FERI is ideally positioned here.
In total, FERI manages more than 300 private assets (primarily families) and over 200 institutional investors such as professional pension funds or insurance companies. The number of new mandates increased by ten percent in 2022.
According to FERI, 2023 will be another challenging year for the capital markets despite the strong start to the year. "We have taken advantage of the opportunities in this environment in the first few weeks, but remain vigilant about future developments in view of the existing risks," Marcel Renné emphasised. For its own business, FERI expects the long-term growth trend to continue in 2023. Future topics and the established FERI sustainability approach are playing an increasingly important role in the expansion of the range of services and consulting.