Erik Weisman, fixed income portfolio manager, MFS Investment Management:
“While the initial reaction to the announcement has been positive, the key problem with the structure of this programme rests on the decision to place 80% of the asset purchases on the individual national central banks’ balance sheets. This is a step backwards and is antithetical to the broader goals of the monetary union. It serves as further proof that the eurozone lacks a true banking, fiscal and political union.”
Wouter Sturkenboom, investment strategist, Russell Investments:
“Over time, we expect higher inflation expectations and reduced safe haven demand will push yields 10-20bps higher, although we are conscious that the incremental demand from the ECB might overwhelm supply and keep rates low. For the attractiveness of eurozone financial assets, this move is the equivalent of a really thick layer of icing on an already attractive cake. We expect it to have a positive impact on eurozone equities, credits and peripheral bonds, while lowering the euro exchange rate.”
Danny Vassiliades, head of investment consulting, Punter Southall:
“By buying European sovereign debt, the ECB will increase demand for sovereign debt in the UK as investors, formerly holding European debt, look for alternative sources of yield. This can only help to keep UK gilt yields lower for longer and may even reduce them further. Any lowering of gilt yields will increase the value placed on pension liabilities and may indeed cause deficits to increase in the absence of corresponding asset rises.”
Yoram Lustig, lead fund manager, Axa IM Smart Diversified Growth fund:
“We’re overweight equities, pretty close to the top of our range in normal conditions. We believe that equity markets should be supported in the medium term by the boost to the global economy due to low oil price, liquidity (QE from Draghi) and the US economy continuing to roar. In the margin, we plan to be more tactical, using futures contracts on equity indices to aim to buy on the lows and sell on the highs. As such, we plan to take profits after Draghi says what everyone expects him to say, as we believe volatility is around the corner and the Eurostoxx Index is overbought.”
Mark Burgess, chief investment officer, Threadneedle Investments:
“For European equities specifically, four tailwinds have emerged in quick succession: a weakening currency; a weaker oil price; sovereign QE; and lower valuations versus other world markets. We have therefore decided to increase our weighting in European equities by 25 basis points for our multi-asset portfolios, funded from cash. We also feel that, in general, the ECB’s move should reinforce demand for income-producing assets, and in that context higher-yielding equity markets such as the UK should remain attractive.”
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