“It is challenging to make a return, but we don’t agree there are no returns to be made anymore,” says Hein. While many of his peers are switching to passive solutions in fixed income, FIM’s chief investment officer is going the opposite way, emphasising the importance of tactical bets. “Even though interest rate levels are very low, there are movements in the markets. You have to take benefit of those, playing the interest rate curve or the spreads.”
Increasing allocation to higher yielding assets such as high yield bonds is not really an option for Hein, because they are too similar to equities. “If you have a lot of high yield bond in a multi-asset portfolio, you end up with a lack of negatively correlating assets.”
“What we really have to find are assets that do not correlate that much with the other parts of the portfolio,” says Hein, who is, like many of his fellow fund selectors in Europe, a fan of multi-strategy hedge funds.
What makes Hein stand out from his peers, though, is his negative outlook on the equity markets. “It’s very difficult to find attractive valuations anywhere. We will be moving between neutral and underweight.”