29 AUG, 2023
Margarida Neves is a graduate with a Certified European Financial Analyst (CEFA) specializing in Financial Analysis from the Institute of Economics and Management in Lisbon. Then, she started her career at the Ministry of Finance as a Research Technician and later continued her impressive journey at Millenniumbcp in Lisbon. She held a position as a Portfolio Manager and eventually progressed to her current role as an Investment Specialist.
There were several circumstances that led me into the financial sector. When I was young, I used to say that I wanted to work in a company, and I was attracted to the concept of management. Therefore, choosing a business management course seemed like the obvious choice. However, when it came time to apply to university and under the influence of my father, I listed economics as my first choice, arguing that I would start learning in a broader field and later specialize in management. As time went on, I really enjoyed the economics course, especially the areas of macroeconomics. By the time I finished the course, my intention was already to work as an economist, anywhere but in the financial sector, an area that in 1994 was not very appealing to work in Portugal.
My first job was in the research department at the Ministry of Finance. Here, I began to have some professional contact with the financial sector. After a year of work, I realized that I needed more interaction with people. I am fond of working in a team and with daily interactions with other people.
That's how I entered the financial sector, in the sales department. After a few years (and departments as well), in 2010 I came to WMU at Millenniumbcp, where I work as an investment advisor. I can say that the financial sector wasn't love at first sight, but it's certainly a lifelong love.
One of the highlights of this position is that there is no monotony in a typical workday. It's necessary to keep up with the news as they come out and respond quickly to client requests. At the same time, there are meetings and portfolio review proposals with mandatory frequency and character, and this part of the workday needs to be well-planned to optimize time.
The most challenging part during the day is balancing the technical aspect which requires concentration and focus with the commercial aspect where different skills are important.
Still, the balance is very positive, and after 13 years, I continue to be passionate about this position.
Despite the actual uncertain macroeconomic environment, I can see some appeal in overweighting certain asset subclasses for enhancing risk-adjusted returns.
In the fixed-income classes, I still see opportunities in High-Yield debt, which currently presents historically high expected returns (assuming a scenario where spreads remain well-behaved, plausible for our baseline of a soft landing). I also see interesting opportunities in emerging market debt, where the carry is quite high too; this class could be particularly favored if the Fed finally ends its interest rate hiking cycle and the US dollar loses some strength, thus allowing various emerging market central banks to reduce interest rates as well (where real interest rates are currently quite attractive).
However, I`m not as constructive on government debt (either in the Eurozone or even in the US ), where I see mostly steady but not necessarily falling yields and hence a slower recovery of returns (even after the unprecedented drops in 2022), at least until inflation approaches central bank targets in a sustained manner, they clearly signal the end of the rate hike cycle (and where the terminal rate is), or economic growth appears more fragile – we have not reached these conditions yet.
In the equity space, I remain cautiously optimistic. This positioning is informed by our macroeconomic perspectives, which point to a higher probability of a soft landing than a recession (compared to what is priced into the markets). In particular, despite the slowdown in real GDP growth, nominal growth remains high, making corporate profits resilient. Nevertheless, we recognize the risks that could potentially lead to a recession, although even if it does happen it should be a shallow one due to the lack of structural imbalances in the economy (household and corporate balances seem to be in good shape overall). Thus, the balance of risks leaves us cautiously optimistic.
Our overweight to equities is essentially diversified among regions, sectors, or styles, modestly favoring Eurozone equities (where an energy crisis was avoided, demand for services remains solid, the job market is resilient, and valuations are relatively attractive) and Asia-Pacific equities (where China's reopening happened faster than expected and new stimuli are being considered, although well-identified structural risks persist, as well as in Japan, where the economic cycle is in a robust momentum phase, and monetary policies remain accommodative).
I see particular enthusiasm around the Technology sector, supported by a potential pause in interest rate hikes, as well as mega-trends such as robotics or Artificial Intelligence.
I consider interesting opportunities in the Healthcare sector too, a mostly defensive sector but also with structural tailwinds (demographic factors, for example). The recent rise in Novo Nordisk's share price, for instance, illustrates the potential for earnings growth that is uncorrelated to the economic cycle.
Finally, I also see potential opportunities in the Financial sector, even if one has to be mindful of distinguishing between well-capitalized and some “niche” banks with higher specific risks. Generally, a context of higher interest rates is supportive of net interest income, and in particular European banks seem well positioned as we have finally moved past the pre-pandemic negative yields regime. Valuations seem relatively attractive, too, namely as the turbulence in US regional banks shook equity markets but for now with little proof that it meant any systemic concern for the sector.
Never give up on diversification, especially in a context of high uncertainty. By constructing multi-asset portfolios and taking advantage of uncorrelated positions, we can reduce volatility while not necessarily giving up on returns. In the current environment, both equities (with price-earnings multiples at or below average in most regions) and bonds (with the highest yields in years) seem to have arguably fair valuations – a boon for long-term expected returns.
In addition to the traditional mix of stocks and bonds (adjusted to each client's investment profile), I also favor an allocation to alternative investments, with a modest overweight to commodities (key in a context of geopolitical risks and inflationary pressures), as well as complementing portfolios with some alternative strategies funds (long-short or trend-following, for instance ).
At the top of the list are my children. I have four children and they are, undoubtedly, the best part of me. They are my reason and purpose in life. When I'm not working, I like to be with them, talk to them, think about their lives, set plans, and outline strategies. My children are my greatest legacy, and I hope to leave behind four people who will somehow make an impact to make the world a better place.
After that, I like to diversify. I enjoy reading, going for walks, and studying in-depth topics that interest me, like mindfulness, emotional intelligence, and personal growth. Lately, I've been drawn to the being aware world. Alongside these more individualistic and solitary activities, I really enjoy parties, social gatherings, and spending time with my family and friends. I am a part of a music choir and I attend frequently a book club.
By Constanza Ramos