Investing in the markets allows savers to grow their wealth while supporting the economy. In Luxembourg, 15% to 20% of private individuals’ assets are held in the form of securities, mainly shares or bonds.
Periods of heightened geopolitical tension or pressure on international trade balances, such as those experienced over the past year, lead to significant market volatility. Faced with such developments, private investors may feel helpless when part of the value of their investments evaporates within a few days. How should they react in such circumstances? What solutions are available to them? We discussed these questions with Claude Hirtzig, Senior Vice President, Head of Department, Retail & Professional Banking.
What attitude do savers and retail investors adopt when shocks occur, such as the one currently linked to the conflict in the Middle East?
At the bank’s balance-sheet level, we are seeing an increase in liquidity rates. This means that investors — mainly institutional ones and, to a lesser extent, retail investors — are reducing their exposure to financial markets. Among private individuals, this can also translate into reduced day-to-day spending. People become more cautious in the way they consume, given rising energy prices.
How does the bank support retail investors in dealing with the concerns such shocks may generate?
In general, we have observed that retail investors have become significantly more mature in recent years. They are better informed before making investment decisions. As a financial partner, we communicate more closely with our clients in order to clarify the issues at stake and help them take a step back from current events.
We provide them with context and explain the risks currently affecting the markets. When investing in financial markets, it is essential not to make decisions driven by emotion or haste, but rather to adopt a long-term perspective. Corrections, even major ones, generally occur over relatively short periods. Once absorbed, the markets rebuild themselves.
If one wants to limit losses in the face of shocks, is it necessary to react quickly? Is this within the reach of private individuals?
Yes, it is important to be able to react quickly by anticipating the impact of current events on the markets. This is what institutional investors strive to do. For retail investors, however, it remains more complex and can be a significant source of stress.
To address these concerns, Spuerkeess has launched a discretionary retail portfolio management offer, enabling investments to be regularly reallocated according to market developments.
How does it work?
Discretionary portfolio management is a service traditionally reserved for private banking clients. Through the mandate granted by the client, a portfolio manager can carry out transactions on their behalf, taking into account their risk profile and preferences — particularly regarding sustainable investments — in order to optimise returns.
With our lux¦mandate offer, we wanted investors with at least 25,000 euros in assets under management to benefit from similar support, even if it does not provide the same level of personalisation.
This management is carried out through an investment portfolio managed by the bank and composed of a range of proprietary funds that we know inside out. Based on several predefined profiles, this structure makes it possible to adapt the geographical and sector allocation of investments, while also making adjustments within the funds themselves according to market developments.
What are the main benefits for retail investors?
First and foremost, it provides greater peace of mind. Clients who neither have the time nor the experience to manage their investments directly can rely on asset management professionals. These specialists ensure active portfolio management and are able to react quickly to current events and their impact on the markets.
This helps limit risks and, in the long term, improve investment performance. It is important to emphasise that this management is carried out with full transparency: performance and investment decisions are communicated regularly to clients.
This product has met with significant success in a short period of time. Today, as part of luxIMandate, our teams actively manage 600 million euros on behalf of our retail clients.
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