On the Impact of Low Rates and Unconventional Monetary Policies on Asset Management

The central banks’ unconventional policies (quantitative easing through asset purchases and forward guidance) drew all bond yields downwards, even below zero for a number of them. Low margins, negative flows, yield-free risk instead of risk-free yield, fixed-income asset management is all the more complicated and the investor has to take in more risks: longer-termed bonds, riskier issuers, foreign assets, or diversification towards stocks or real assets. This is by the way what the central banks wished for, and this will end with the very success of these policies: economic recovery should bring higher yields without compromising the strength of the stock market.