Consolidating or diversifying portfolios was the topic of today’s live debate, organized by the Bucharest Stock Exchange, which brought together investment fund managers. BT Financial Group was represented by Aurel Bernat, CEO of BT Asset Management, who made the following remarks:

The main asset class in an inflationary environment

“In a (global) high-inflation environment, equities should be the primary asset class to put money into. Companies can expand margins even when there is pressure around them — to raise prices, to optimize costs — and a modest inflationary trend, from this perspective, helps. The higher inflation is, the more it works against saving. For a growing economy, inflation will spur investment in assets.”

Mutual fund investor behavior

“In general, past performance sells. When past returns are visible, it’s good for clients to add new money to equity funds and keep going. As an industry, I can say funds have unlimited potential in Romania. Investment funds are about 5% of GDP. We’re starting from a relatively small base, but interest is increasing.” What has changed? “It’s not just lump sums to buy at a discount, on the idea of future growth. Over the past year we are seeing recurring contributions — small amounts coming in month after month — and investors who have set themselves the goal of saving actively. Investment stress goes down with this type of behavior.”

The equity market

“If we think about the equity market, equities are, in fact, businesses that want to do better, and the prosperity they generate is passed on to shareholders and to those who buy equity funds. Looking at Romania, we have an opportunity for this market to do well.”

Recurring, phased investing

“The future starts now when it comes to investing. Let’s phase it in. It’s trendy to invest in equities; it’s cooler to invest in very well-known companies than in niche ones. With all this idle cash, investments can start with money-market, bond or balanced funds and, as clients get used to it, move toward equities. Make a smart allocation — put part of the amounts to work, try something else as well — because inflation is at the door.”