Managing wealth, assets and reputation: find out more in our latest Cahier thématique
Banque de Luxembourg's Cahiers offer readers the chance to stand back and reflect on subjects of general interest revolving around a particular theme. Our second edition concerns the world of management: a profession we have practised with skill and dedication for nearly a century.
Managing wealth, assets, reputation etc.
Under the heading of "management", our latest Cahier features 16 articles written by external experts (including academics, sociologists, creative writers and journalists) and Banque de Luxembourg specialists, providing our readers with a variety of content and different views.
The subjects covered include the following:
- Modern portfolio theory
- Managing the common good
- Intangible wealth
- Behavioural finance
- Private equity
- Absolute return
- Impact investing, etc.
The Cahier also features an interview with Guy Wagner, Chief Investment Officer at Banque de Luxembourg for over 20 years. He describes the reasons why he prefers to step off the well-travelled path and apply a sound and rigorous methodology, whereas the asset management sector tends to have a herd mentality and finds it difficult to detach itself from the market indices. Here is an extract:
What are the most frequent errors in portfolio management?
Guy Wagner: The asset management sector is awash with theories, many of which are somewhat questionable: markets are perfectly efficient, shares
always rise in the long term, bonds are safe investments and emerging markets are risky. These theories
often induce error and erode asset growth.
Why do these errors persist?
G. W.: Many fund managers tend to want the reassurance of adopting ‘known’ theories and they don’t dare to question the status quo: they like to follow the herd. In a way,
this is rational. It shields fund managers from criticism and safeguards their jobs. But it is an attitude that also jeopardises
their clients' capital and offers little protection when the markets fall. Similarly, when the markets
recover after a long bear run, you can easily miss a good part of the upside potential if you just go with the consensus.
What do you mean by "contrarian management"?
G. W.: Contrarian management involves operating differently from the majority of the market, not just following the consensus, swallowing fashionable trends or tracking the indices. It is based
on common sense and stems from the principle that when equity markets fall, shares become more attractive and vice versa. So when the markets
tumble, we tend to buy, and when they are rising sharply, we are inclined to sell. We do not invest on speculative markets, even though the markets can be irrational for
long periods. In other words, we do less well than the indices in some periods but, over the long term, we usually generate higher returns.
Order a copy of the Cahier
To read the whole interview with Guy Wagner and the other 15 articles in the Cahier, please order a copy by filling in the form below or pick one up in reception at our branches.