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The view from Lugano: Compass AM

The view from Lugano: Compass AM

Giuseppe Ganci, fund manager at independent asset manager Compass AM, speaks to Citywire Switzerland in our latest Q&A session. 

Compass Asset Management fact file:

  • Date opened: 1998
  • Assets under management: CHF900 million
  • Size of team: 26
  • Office motto: Towards your future
  • Bullish/bearish: Bearish

Why are you based in Lugano and what is the best thing about the place?

We are based in Lugano for historical reasons: that’s where we started and where we have grown. We now have a good network in the Ticino area.

The best thing about being based in Lugano is that we could grow. This closeness to the Italian market was important when we started and, we believe, is still important now. Through regulated distributors we expand our funds business.

We saw the Lugano financial centre getting more professional and growing in terms of competence and expertise. Lugano suits our company; we invest a lot in being competent and up to date on the market and in the past 15 years, Lugano has been going that way. We are taking part in this evolution towards the internationalisation of the business, which we believe will be the key for the next decade.

What are the drawbacks of being based in Lugano?

It‘s not a big financial centre and it‘s not always on the radar for big institutions.

Which asset classes do you favour at the moment?

We are value investors. Our historical expertise is mainly in fixed income funds but we have added other asset classes. Our focus remains in global, European and emerging market fixed income but is also growing into European and Asian equities.

Looking for opportunities this year, we called on fixed income in emerging markets hard currency. Starting from the second quarter of 2016, we increased the weight of Argentina based on the positive outlook we had on the country. We also maintain a positive outlook on Asian equities ex-Japan. We believe the recent bull market on equities has been pushed up mainly by the excess liquidity provided by the central banks rather than by improved fundamentals. Over the year we turned mildly positive on gold.

What’s the number one concern for your clients right now, and what asset classes are they most interested in?

Negative rates on cash and negative yields on government bonds. Clients are more and more interested in liquid asset classes, in chasing yield. We advise them to be prudent and to choose liquid assets with a pinch of salt.

Losing liquidity is always something you want to avoid, so if you go down that route to find yield, you have be fully aware of what you are doing and of the structure behind certain products.

Which markets are you avoiding?

Depending on a client’s risk profile, we are trying to avoid government bonds as much as possible, particularly in the short term. We are also underweight US equity markets. Our credo is to keep it simple and avoid complex structures in your portfolios.

If you were in Lugano on a business trip for 24 hours, what would you do?

I would visit the new LAC theatre. I would also have a nice lunch with a view of the lake at the restaurant La Perla.

This article originally appeared in the December 2016 edition of Citywire Switzerland magazine.

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