What are the best investment ideas

29.1.2019 | advertising Five investment ideas for 2020

TEXT: Daniel Evensen

There is at least one thing you don't need to worry about with the “Investment 2020” project: interest savings. Overnight money, savings bonds and, in the meantime, even many bonds are likely to be zero for years to come. "In this new world of interest rates, secure, fixed-interest forms of savings generate costs instead of yielding income at the latest after deducting inflation," says Deka strategist Joachim Schallmayer in an interview.

SOMETHING AVAILABLE TO RISK HAS TO BE

But where do you put your savings? The environment of moderate growth, moderate inflation and expansionary monetary policy does not only speak in favor of permanently low interest rates. It also speaks in favor of investments in securities - above all in stocks. "Investors shouldn't invest everything in one fell swoop, but proceed step by step, but nevertheless consistently," said Schallmayer.

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But open-ended real estate funds have also proven in recent years that they can beat inflation. Certificates, on the other hand, score with their flexibility, because they offer attractive investment opportunities in almost every market environment. Whichever options investors choose, they need to be willing to take risks. Because absolute security costs real money in the new world of interest rates. Here are five investment ideas for the new decade:

1. INVEST SUSTAINABLY

Climate change is omnipresent and was also at the top of the agenda at the World Economic Forum in Davos - for good reason. According to current NASA measurements, 2019 was the second warmest year worldwide since records began in 1880. It is not so much individual peak values ​​that worry the space agency researchers, but rather the long-term trend. "Every decade since 1960 has been warmer than the previous one," says NASA expert Gavin Schmidt. “We know that it is primarily the greenhouse gases that are behind the rise.” For the 2020s, the researchers predict that the rise in temperature will continue. “It is high time to stop the trend,” says Ingo Speich, Head of Sustainability and Corporate Governance at Deka.

THIS IS HOW GLOBAL WARMING PROGRESS

Securities savers can also help here. Those who opt for sustainability funds support companies that operate in an ecologically and socially responsible manner - which also speaks for the long-term success of their shares. And the more investors invest their money in sustainable investments, the greater the pressure on companies that have not yet taken on their responsibilities.

The new Deka Portfolio Sustainability Global Equities fund invests globally and with a broad diversification in companies selected according to criteria such as environmental management, social responsibility and good corporate governance. In addition, the fund management attaches particular importance to the fact that the stocks for the portfolio have shown below-average price fluctuations in the past - even if the fund cannot avoid the typical economic and political risks of the stock markets. Fluctuations in value that could have a negative impact on the investment result cannot be ruled out. Read here what makes this sustainability fund so special.

2. FOCUS ON DIVIDENDS

Back to the basics, Deka said in the summer of 2010 and launched the Deka-DividendenStrategie equity fund. Fund manager Ralf Dietl invests around the globe in companies with proven business models that allow their shareholders to participate in the profits on a permanent basis and with the greatest possible increasing tendency.

Today there is often more talk about the price development of shares, but originally the dividend was usually the main reason for buying shares. Long-term studies show that up to the present day dividends account for around 40 to 60 percent of total returns on stocks, depending on the market and the period of study.

HIGH DISTRIBUTIONS FOR INVESTORS


The Deka dividend strategy also shows how attractive dividend payments can be. The fund passes the dividends of the companies in which it has invested on to investors in the spring and fall. Anyone who bought fund units worth EUR 10,000 when it was launched in August 2010 can look forward to a total of EUR 3,822 in dividends today.

“According to the current status, very high dividends will be paid again in 2020 worldwide. In the Deka-DividendenStrategy, the distribution yield in relation to the current fund price is around 3 percent, ”says fund manager Ralf Dietl. However, unlike interest rates, dividends are not set in stone. In the event of a bad business situation, companies can cut them or even cancel them completely. As always with stocks, there is also the risk of falling prices. Therefore, dividend funds are also an investment for the long term.

3. ASIA AS A DRIVER OF GROWTH

The USA and China have at least agreed on a partial solution to the trade dispute and hopefully the coronavirus should not slow down in the long term. In any case, the fundamentals in the region are impressive. For Asia - with the exception of Japan - Deka is forecasting economic growth of a good 5 percent in the current year. "Asia remains the engine of growth in the global economy," comments Deka chief economist Ulrich Kater.

In addition, 15 Asian countries, which make up around 40 percent of the world's population, want to join forces in a free trade area soon. In the medium term, their weight in the global economy is likely to increase significantly. Because the equity markets in the region are also comparatively favorably valued, Asia also has potential for investors.

However, the rise of the emerging markets is not going in a straight line; it involves a few stumbling blocks. As a result, the prices on the emerging markets' stock exchanges usually fluctuate above average. Asian stocks are particularly interesting as an admixture for opportunity-oriented investors who are prepared to take on higher price and currency risks.

ASIA DRAWS FROM THIS

With DekaLuxTeam-Aktien Asia, investors invest in a broadly diversified manner in countries from China to India and the Philippines to South Korea. The IT industry is currently by far the most heavily weighted in the fund portfolio, with companies such as chip manufacturer Taiwan Semiconductor, Internet giants Alibaba and Tencent, and Samsung.

4. THE AGE OF THE METROPOLIS

In 1920 less than a third of the world's population lived in cities; according to a forecast by the United Nations, it will be more than two thirds in 2050. Big cities in particular - the metropolises of the world - are gaining influence. Investors can participate in the stable trend towards urbanization with open-ended real estate funds.

METROPOLIS AS ECONOMIC CENTERS


“The more people live and work in cities, the more the demand for offices, hotels, logistics and retail space increases there,” explains property expert Esteban de Lope from Deka: “This is exactly the type of commercial property that our new fund relies on Deka-ImmobilienMetropolen. “The fund invests in metropolises that are among the top 30 locations in the world in terms of urbanization, globalization, new work and ecology. These include well-known names such as New York, Paris and Tokyo, but also emerging metropolises such as Prague and Oslo qualify. In December, the fund management team in London acquired the “Moorgate 51” office building, the first property for Deka-ImmobilienMetropolen. More purchases are to follow soon.

5. THE MISSING PIECE OF PUZZLE

In terms of opportunities and possibilities, certificates differ fundamentally from mutual funds; this is why the forms of investment complement each other so well. "For example, there are certificates with fixed interest rates and short terms from as little as six months," explains Hussam Masri, Head of Private Banking, Product Management and Product Sales at DekaBank. "Certificates are also widespread, which can generate positive returns even when the markets are falling or moving sideways and which are equipped with a risk buffer."

Regarding the risks, investors should note that the certificates are bearer bonds. If the issuer of a certificate goes bankrupt, the investors are also affected - in the worst case with a total loss. However, a minus can also occur if the underlying value of a certificate, for example a stock index or a single share, falls so sharply that the risk buffer is insufficient.

Two examples that show what is possible with certificates: Express certificates are aimed at investors who tend to expect a sideways trend on the stock exchanges. As a rule, interest also flows if the base value treads on the spot. Depending on market developments, Express Certificates can also be redeemed early, including interest - or they run until the end of the usually four to six-year term. Express certificates are equipped with a risk buffer; there are also other variants with useful extras such as airbags or memory mechanisms. The savings bank advisors know which of the options are right for the individual investor.

The advisors can also help with details on vault bonds. For more conservative investors, this class of certificates combines interesting profit opportunities with clearly defined hedging mechanisms. In the case of vault bonds with a cap, investors participate in rising prices of the underlying asset up to an upper limit - such as the Euro Stoxx 50® share index. They have a high level of protection against falling prices of the underlying at the end of the term. Those interested can get an overview of the current offer on the Deka certificate website.

These five investment ideas alone show that securities savers have enough options even in the new world of interest rates. Which of these you choose depends on your individual goals, needs and preferences. For every securities account, however, the individual components should complement each other well. This can be done with just a few funds and certificates. With the help of modern advisory tools, savings bank advisors can determine the best way to do it.

The sole binding basis for the acquisition of Deka Investmentfonds is the relevant key investor information, sales prospectuses and reports that are available in German from Sparkasse or DekaBank Deutsche Girozentrale, 60625 Frankfurt and atwww.deka.de, are available.

Before making an investment decision in certificates, potential investors are advised to read the securities prospectus in order to fully understand the possible risks and opportunities of the investment decision. The approval of the prospectus by the competent authority is not to be understood as an endorsement of the securities offered. The securities prospectus and any supplements can be downloaded. All securities information and the current basic information sheets are also available free of charge from your Sparkasse or DekaBank Deutsche Girozentrale, 60625 Frankfurt. Note:you are about to acquire a product that is not easy and can be difficult to understand.

Status: January 29, 2019