1、29/06/2022INDEPENDEN T P U B L I C AT I O N BY#0815R AC O N T EU R.NE TTRADING STRATEGIESFINDING VALUE AMID INFLATIONARMCHAIR TRADERS LOOK TO THE FUTURE0503WHAT NEXT FOR CRYPTOCURRENCY?10R A C O N T E U R.N E TT R A D I N G S T R AT EG I E S0302THE UKS INFLATION RATE IS SOARINGAnnual inflation rate

2、of the consumer price indexhe doyen of astute invest-ment,Warren Buffett,has been warning about the return of high inflation since the bad old days of the 1980s,describing it as a“cruel tax”that“swindles almost everyone”.Despite this,the recent surge in prices hasnt deterred him from buying shares.E

3、ven as the US inflation rate hit a 40-year high and stock markets fell sharply this year,the venerable chairman and CEO of Berkshire Hathaway ploughed more than$40bn(33bn)into equities.Amid a surge in global commodity prices,Buffett has focused on oil and gas stocks.Hes also snapped up shares in tec

4、h giants Apple and HP,both of which fit his philosophy of investing in good-value firms that make products that are always likely to be sound performers,regardless of whatever economic headwinds may be blowing.As food,fuel and energy prices have rocketed since Russia invaded Ukraine in February,the

5、markets have been shaken,obliging fund managers to adjust their trading strategies.Consumers are tighten-ing their belts while central banks are hiking their interest rates,which is restricting growth and so increas-ing the risk of recession.These conditions are spooking investors.The benchmark US s

6、tock index the S&P 500 lost about 20%of its value between January and mid-May,for instance.Joe Little is chief global strategist at HSBC Asset Management,which is responsible for assets worth about 525bn.He says its“completely understandable that investors have been feeling confused and uncom-fortab

7、le,given that most had never experienced an inflation shock on the scale weve seen over the past 18 months.There are some significant unknowns about the economic out-look.For professional investors,this is where your investment philoso-phy and process really help you through the uncertainty.”Diversi

8、fication comes into its own as a protective measure during peri-ods of high inflation,according to Little.Traditionally,investors have relied on the relative stability of bonds to balance out the riskier equities in their portfolios.But the price of bonds will fall as central banks push up their bas

9、e rates fur-ther to tame inflation,so they wont be able to fulfil their usual hedging role.Investors therefore need to look at alternatives,he says,pointing to the merits of more tangible assets such as gold and real estate.As for equities,investors must think even more carefully about the type of c

10、ompanies they buy shares in,warns Victoria Scholar,head of investment at trading platform Interactive Investor.“For a long time,equity market gains have been underpinned by ultra-loose global monetary policy.But the era of monetary loosening is over,which has serious implications for valuations,”she

11、 says.Scholar believes that its important to differentiate between firms that can pass most of their heightened cost burden on to consumers through higher prices and so avoid margin compression(known as price makers)and those that must shoulder these extra costs them-selves(price takers).She cites c

12、ompanies in the luxury sector as examples of the former.With the“power to push up their prices without significantly dimin-ishing demand,they could be inter-esting.But its also worth noting that we could see weaker demand if growth in the global economy and Chinas in particular slows.”While debt-lad

13、en firms are most likely to struggle in the current con-ditions,those in certain sectors stand to benefit from rising inflation and interest rates,Scholar notes.“Banks,for example,tend to fare better because of improved net inter-est margins,”she says.“Also,a lot of the current inflation has been dr

14、iven by gains in the commodities complex on the back of the war in Ukraine,so stocks in fossil fuels and mining have been achieving strong profits.”David Jane is multi-asset manager at Premier Miton Investors,which is responsible for about 14bn of assets.He reports that his firm is becoming increasi

15、ngly concerned about the risk of recession and is adapting its approach accordingly.“During a period of high inflation we would expect interest rates to be rising over that time.This means in our fixed-income exposure wed avoid longer-dated bonds especially,”he says.Thats because high infla-tion ten

16、ds to erode the purchasing power of a bonds future cash flows.With respect to equities,Jane believes that companies with“real assets”and suppliers of basic raw materials are likely to do better.For that reason,his firm prefers under-valued stocks to growth stocks(comparatively risky punts in firms t

17、hat are expected to outperform the market average).At HSBC,Little is more sanguine about the outlook.He believes that the global economy will probably avoid the recession that has been predicted in some quarters.“While we think that the stagfla-tion tone of weak GDP growth and high inflation will co

18、ntinue for a while,we do see some encouraging signs.Supply chain bottlenecks are beginning to ease,for instance.Our view is that inflation has peaked and will gradually cool off over the next six to nine months,”Little says.“It could be that stock market behav-iour will look rather different in the

19、second half of this year.”For now,though,HSBCs approach to equities has become more selec-tive,focusing on commodity-linked stocks and price makers.Little also favours undervalued and short-du-ration cash flow stocks which are held for weeks or even days over riskier growth stocks.Scholar believes t

20、hat volatility in the equity markets will last the whole year,but she is confident that the tightening of monetary policy by central banks should ease most peoples fears that inflation might spiral out of control.She adds that a common mistake is for investors to“hit the panic but-ton”by liquidating

21、 their positions and heading for the exit at times of great uncertainty.Given that high inflation erodes the value of money in the bank,keeping its real rate of return“very much still negative”despite recent interest rate rises,“remaining invested appears to be the best strategy in the long run”.An

22、ill wind:how the experts handle inflationTRADING STRATEGIESA global surge in prices has knocked the equity markets off their stride and put many investors on the defensive,yet there is still value to be found Distributed inDaniel ThomasAlthough this publication is funded through advertising and spon

23、sorship,all editorial is without bias and sponsored features are clearly labelled.For an upcoming schedule,partnership inquiries or feedback,please call+44(0)20 3877 3800 or email Raconteur is a leading publisher of special-interest content and research.Its publications and articles cover a wide ran

24、ge of topics,including business,finance,sustainability,healthcare,lifestyle and technology.Raconteur special reports are published exclusively in The Times and The Sunday Times as well as online at The information contained in this publication has been obtained from sources the Proprietors believe t

25、o be correct.However,no legal liability can be accepted for any errors.No part of this publication may be reproduced without the prior consent of the Publisher.Raconteur MediaDisclaimer:Content in this publication should not be used as financial advice.Please ensure you always seek the help of a qua

26、lified investment adviser or financial professional before making investment decisions.Horacio Villalobos/GettyRocketFinRocketFinE C O N O M I C SMarianne CurpheyAward-winning financial writer,blogger and columnist writing for various publications.Former staffer at The Guardian and The Times.Tim Coo

27、perAn award-winning freelance journalist with 20 years experience.He has written for many publications,including The Spectator,The Guardian,and The Telegraph.Jonathan Evans A journalist specialising in HR,the future of work and leadership,with work published in The Independent,Metro and PA.Daniel Th

28、omasWriter and editor,with work published in The Telegraph,Newsweek,Fund Strategy and EducationInvestor,among other publications.ContributorsTPublishing manager Usman ShahDeputy editorFrancesca CassidyManaging editorSarah VizardSub-editorsNeil ColeChristina RyderCommercial content editorsLaura Bithe

29、llBrittany GolobReports editorIan DeeringDesign/production assistant Louis NassDesignColm McDermott Samuele MottaSean Wyatt-LivesleyDesign directorTim WhitlockIllustrationCelina Lucey Kellie JerrardHead of productionJustyna OConnellraconteurraconteur.storiesraconteur-media/trading-strategies-OBR,202

30、2200212022*6%4%2%8%0%*predictionR A C O N T E U R.N E TT R A D I N G S T R AT EG I E S0504ffice workers are heading back to HQ in their droves,bitcoin has taken a tumble and the stock markets are no longer looking anything like a gold mine.Does this mean that the many thou-sands of people

31、 in the UK who took up trading while at home on fur-lough have logged off their trading platforms permanently and slunk away from their screens with their tails between their legs?Not exactly,according to Leon Gauhman,co-founder and chief product and strategy officer of digi-tal transformation consu

32、ltancy Elsewhen.He believes that a signifi-cant proportion of retail investors have emerged from the experience months older and wiser.“Combined with record inflation,quantitative tightening,increased interest rates and the effects of the war in Ukraine have contributed to a much harsher economic cl

33、imate,”he says.“Credit Suisse estimated that amateur retail traders account-ed for 30%of US stock market activi-ty at times last year.That exuberance has evaporated as theyve gone from trying to spend free money to need-ing to budget to eat.This April,for instance,retail trading was down by 20%on th

34、e manic activity seen in the early months of 2021.”But the two key forces that drove gen-Z investors to seek other ways to make money low interest rates and high house prices still havent eased significantly.Now that theyve had a taste of success,many lock-down traders will continue,seeking knowledg

35、e via social media chan-nels such as YouTube and TikTok.It all started so promisingly for the generation of armchair traders that emerged during the Covid lockdowns.How have they responded to the chastening experiences of recent months?School of hard knocksMax Rofagha is the founder and CEO of Finim

36、ize,a financial commu-nity platform giving DIY investors the tools and information they require to make smarter decisions.He notes that,although retail inves-tors have become less active in recent months,they are still trading twice the volume of stocks than they had been before the pandemic struck.

37、“Many among us would have expected retail investors to run for the hills as soon as the market sell-off happened.Instead,they are sticking around,hungry to learn more and shifting their monthly investments to less risky options,such as index funds,”Rofagha reports.He predicts that the next wave of i

38、nnovation in this segment will focus on providing information that demystifies the stock market.While headlines describing DIY investors as dumb money were probably unfair,it has become clear that their education needs to be improved.“Modern investors come with a dif-ferent set of habits,”Rofagha no

39、tes.“They need everything to be bite-sized,mobile and social.”Michael Kamerman,CEO of online trading platform Skilling,has been calling on regulators such as the European Securities and Markets Authority to prioritise investor pro-tection as it pushes its financial edu-cation plans forward with the

40、aim of teaching the masses.“Retail traders will often see their favourite celebrity endorse a crypto-currency on Twitter and be inclined to invest as a result.By doing so,they buy into the clickbait nature of financial influencing online and put themselves at increased risk of nurs-ing potentially l

41、arge losses,”says Kamerman,who adds that he has observed a distinct dampening of enthusiasm among DIY investors in recent months.David Morrison,senior market analyst at Trade Nation,notes that“volatility is exciting,but also incredibly dangerous.Those who actively bought and sold from the late sprin

42、g of 2020 until the begin-ning of 2022 were probably laughing at how easy it was to make money.In fact,there were some notable char-acters who appeared on TikTok ridi-culing old-time investors like Warren Buffett.”A lot of furloughed retail investors were fortunate to start trading just as a bull ma

43、rket was taking hold,but it wasnt long before their lack of experience worked against them.“Many people did make money over that period,but its likely that far more didnt,”he says.“And then the markets stopped going up.Since the start of this year,trading has been much harder.”While plenty of retail

44、 traders went into the markets with their eyes open,many were not prepared for the protracted sell-off.Those that held on have learnt some valuable lessons,according to Morrison.“They have grasped the impor-tance of money and risk manage-ment,as well as how to take probabilities into account when tr

45、ading,”he says.The surge in retail investment over the past couple of years has left lasting effects on brokers,in terms of both their trading infrastructure and client demands,according to Amanda Harrison,senior sales executive at Adaptive Financial Consulting.“The arrival of the pandemic insti-gat

46、ed a surge in online day trad-ing,which meant that the number of accounts jumped significantly.Many brokers did not have the infrastructure to support the boom,which caused temporary sys-tem failures and outages in some cases,”she explains.Having acquired a larger pool of accounts held by relatively

47、 inexpe-rienced traders,many of which have gone dormant,brokers are considering ways to use third-par-ty tools to reactivate and educate their client base.Sami Osman,co-founder and CEO of Quartr,an app designed to make corporate financial information more accessible,considers the surge in retail inv

48、estment at the start of the Covid crisis to have been an unprecedented and wholly necessary change.“It gave rise to platforms that facil-itate all stages of the trading pro-cess,”he says.“Until last year,retail traders were more focused on buy-ing a specific stock than studying that companys fundame

49、ntals.Then there was a clear shift.”While the economic situation has changed dramatically over the past quarter,the technological trends that helped to power the rise of retail trading are here to stay,according to Gauhman.“Deterred by bruising losses,some amateur traders will undoubt-edly give up.O

50、thers will learn from their mistakes and keep trading,”he says.“Wall Street shouldnt breathe easy just yet.”Many would have expected retail investors to run for the hills as soon as the market sell-off happened.But they are sticking around,hungry to learn moreMarianne CurpheyR E TA I L I N V E S T O

51、 R SOn a decade filled with uncer-tainty and surprises,few things have been more inscrutable than the financial mar-kets.Traders have had to learn to nav-igate volatile markets,exacerbated by global economies being forced to embrace an imminent recession brought on by the coronavirus pan-demic,the i

52、nvasion of Ukraine,and several other geopolitical issues.“The way its changed this year com-pared to the previous two years is that you could often buy into markets when they fell and still make money,”says David Jones,chief market strat-egist at C.“Weve had booming markets whether stock markets or

53、commodity markets since March or April 2020.”Investors and traders have enjoyed rising markets in the last few years.In such a market,buying the dip was a popular and sometimes profitable strategy among traders,but in 2022 they are finding that is no longer the case.The broad US stock market,the S&P

54、 500,is down 22%this year alone.“Markets are much more volatile,”says Jones.“Blindly buying the dip isnt working this year.”That isnt a surprise to long-term investors,but is a rude wake-up call for anyone entering the markets in the last few years.“Its important to look to buy when its lower in val

55、ue.“But thats quite a change in psyche for a lot of investors and traders,”says Jones.There is also a belief by some that its unethical or unpatriotic to bet against companies though that over-looks the dynamics of the market and the idea that every company can lose value as well as gain it.Short-se

56、lling was curbed in the United States in the aftermath of the 2008 financial crisis,but remains a valid and legal method of trading that investors may consider in fragile economic times like this.It does,of course,mean that investors lose money if a company performs better than forecasted,so the adv

57、ice is to be careful with your cash.Jones says:“With short-selling,its important to have risk controls in place,but youre limiting your opportunities if you dont look at the idea,particularly in the sort of mar-kets weve had this year.Its one strat-egy to look at if you thought markets were going to

58、 continue to slide from here in the months ahead.”Using stop lossesWhen markets are in freefall,its important to apply the brakes.“Using stop losses is really important,”says Jones.In mid-May,Tesla was trading at around$900 a share.In mid-June,it was trading closer to$650.Traders who put measures in

59、 place to manage their risk were insulated from the full scale of that loss by putting in a stop loss,which is a notice to trading plat-forms that you want to sell if the value of a position drops below a certain value.“You can say:Im happy to buy at$900,but if it drops 10%,I want to come out,”he ad

60、ds.Many retail traders,such as those who use platforms like C,arent fully aware of the range of options available to them,including stop losses.Jones advises deploy-ing sensible risk control measures like the stop loss in order to insulate yourself from the challenges markets currently present to in

61、vestors and traders alike.Diversifying your portfolioThe challenging market is hitting everyone at present,but one way to try and slow the tide is by diversify-ing your investments.“Its hard at the moment,because everything is fall-ing,”says Jones.“But its better to spread the risk across different

62、asset classes,companies and investments than to pursue profits from one single area that could quickly go south.”Jones points to the price of oil:if a trader had rushed into oil in March this year when it surged after Russia invaded Ukraine,they would have lost around 30%of their investment.“Diversi

63、fication is one option and a very sensible option when it comes to trading and investing,”he says.That includes investing in exchange traded funds(ETFs)and trading derivatives on a host of different markets including commodities,if investors think these will continue to rise in value.Gold,for exampl

64、e,con-tinues to prove popular in challenging circumstances.There is also another option he sug-gests,albeit one that seems unusual for traders and investors proactively looking for opportunities to profit.“You could do nothing,”he says,“if you thought this was all a little bit too crazy.”But thinkin

65、g longer-term is crucial.“It can be very tempting,when markets are crazy,to be very short-term,”he says.“Dont think because markets are crazy,and moving really quickly,that you have to act the same way.”To learn more about short-selling and other retail trading strategies,visit a lot more defensive

66、now than pre-viously,”he says.However,there are ways inves-tors can still find opportunities in the market,even in the extraordi-nary situation we now find ourselves,but it requires stepping away from widely used long-only trading strate-gies where you buy low and sell when prices rise.Embracing the

67、 short sellThree-quarters of all trades exe-cuted by C users in 2021 were long-only trades,meaning they bought shares in a company hoping the price would rise.Its a general rule of thumb that continues today,even as markets everywhere are fall-ing more than half of the traders still take long positi

68、ons.“Its cer-tainly something thats ingrained into plenty of us as investors and traders,”says Jones.“You buy first and then sell higher up,hopefully.”However,in an upside-down market,attitudes and approaches need to change.Short-selling speculating on assets or securities that you predict could los

69、e value is one way to potentially make money in a challenging economy,where values and profits are being squeezed in every way.With short-selling,you sell a position in a company high,and How investors can trade in topsy-turvy marketsWith markets in volatile territory,traders are seeking new and div

70、ersified strategies to insulate losses and increase profitabilityIBlindly buying the dip isnt working this year Commercial feature30%Would have been the loss for traders investing in oil in March 2022CThis article is for general information pur-poses only.It is not investment advice or a solution to

71、 buy or sell securities.Opinions are the authors;not necessarily that of C or any of its affiliates,subsidiaries,officers or directors.Leveraged trading is high-risk and not suitable for all.You could lose all of your deposited funds.Past perfor-mance is no guarantee of future results.THE NUMBER OF

72、ARMCHAIR TRADERS IS IN DECLINEMonthly active users of selected eTrading apps in the UKAirnow,2021eToroPlus500IG TradingWeBullOct 2019Jul 2021Aug 2020350k300k250k200k150k100k50k0R A C O N T E U R.N E TT R A D I N G S T R AT EG I E S0706 ENERGY ASSETS($)Markets have responded to global events in a var

73、iety of ways.The war in Ukraine has taken a toll on wheat and energy commodities,while climbing interest rates and soaring inflation have pushed the price of gold up and crypto down.Indices have also trended downward.The world of trading is complex and volatile,but there are huge rewards for those t

74、raders who make the right bets.Heres how common trading assets have fared over the past six months.TRADING ASSETS AND MARKET SNAPSHOTSPRECIOUS METALS($)AGRICULTURAL COMMODITIES($)CRYPTOCURRENCY($)CURRENCIES($)INDICES($)JanFebMarAprMayJunONS,20227.9%year-on-year rise in the UKs consumer price index,i

75、ncluding owner occupiers housing costs as of May 2022BIS,20195.38tndaily trading volume in foreign exchange markets as of April 2019FAO,202222.8%the rise in the Food and Agriculture Organization cereal price index in the 12 months to May 2022Coindesk,202270%of bitcoins value has been lost since hitt

76、ing its high in November 2020575WTI crude oilBrent crude oilJanFebMarAprMayJunA disequilibrium has developed in the global energy markets.The Covid pandemic caused abrupt and extreme energy and supply chain disruptions throughout 2021,and Russias invasion of Ukraine in February

77、 2022 exacerbated the situation.The price of crude oil has risen by roughly a third since January 2022,while the price of heating oil has nearly doubled over the same period.Although these price movements are labelled by many as a crisis,they have created opportunities for traders in the options and

78、 futures markets.3k2.5k2k1.5k1k0.5kJanFebMarAprMayJunGoldPalladium24 February 2022,Russian invasion of UkrainePlatinumWheatSunflower oilCorn2.5k2k1.5k1k0.5kJanFebMarAprMayJun50k40k30k20kBitcoinJanFebMarAprMayJun0.60.91.21.5EuroPound SterlingCanadian DollarJanFebMarAprMayJun3kUS500GB100EU504k5k6k7k8k

79、Trading Economics,2022R A C O N T E U R.N E TT R A D I N G S T R AT EG I E S0908n outspoken critic of the claims made on behalf of ESG funds,Fancy believes that their outperformance has been greatly exaggerated.“Theres much sloppiness in how fund managers talk about perfor-mance confusing correlatio

80、n with causation,for example,”he says.“We all want to believe that better ESG data leads to better prof-its and performance.Climate activ-ists also jump on it and say:Look green investing is better.But its mostly just marketing in my expe-rience.Many of their claims turn out to be untrue when you lo

81、ok behind the scenes.”Fancy highlights a recent study from the MIT Sloan School of Man-agement showing that ESG ratings from different ratings agencies have a low correlation.This continuing lack of well-defined,widely agreed standards is problematic.“Such variances fuel all kinds of confusion and m

82、ake it easy for people with vested interests to some cases it will actually be detri-mental to the business.Fancy has been particularly annoyed by the hype that came from several wealth managers about the performance of their ESG investments during the early phases of the Covid crisis.The main reaso

83、n why they did so well over that period was that their portfolios happened to be heavy on tech stocks and light on fossil fuels,he argues.“The biggest nonsense about data and correlations arose when the pandemic started.These firms were saying:ESG is outperforming in 2020-21.During the lockdowns,we

84、couldnt travel and were forced to rely on technology.So,if your fund was overweight Microsoft and underweight Exxon,say,its performance was bound to look good,”Fancy says.The argument is that they cannot realistically claim or even imply that intrinsic ESG-related factors were behind that performanc

85、e when other,more powerful,forces were at play.Fancy says part of the problem is that large asset managers are strongly incentivised to claim ESG outperformance,as it enables them to tap into the publics growing awareness of matters of corporate social and environmen-tal responsibility.“Wall Street

86、CEOs refuse to engage directly with anything I say on the subject,even when I ask them directly,”he adds.“Its not in their interests to have that debate.”Fancy accepts there are some“ker-nels of truth”in the idea that ESG factors can improve returns,but these need to be communicated in a far more nu

87、anced way.“We have known for a while that good corporate governance is important to returns,”he says.“But the relative importance of the envi-ronmental and social elements is more industry-dependent.Environ-mental factors can affect returns more if you are a company trading in,say,green energy or el

88、ectric vehicles.Also,if you hold physical assets,such as infrastructure or real estate,you should be mitigating climate risks already.But that is not how ESG is being trumpeted from the rooftops.”Fancys key message for traders is that many ESG-related tools,data and standards are emerging that you c

89、an use to cut through exaggerated claims to find the true drivers of performance.And his overriding message for fund managers?“Be honest about the limits to what ESG can do.”Two respected industry insiders offer contrasting perspectives on a much-hyped market based on the notion that purpose and pro

90、fit go hand in handTim Cooperselectively quote data that satisfies their argument,”Fancy says.He also refers to the work of fellow sceptic Aswath Damodaran,professor of finance at New York Universitys Stern School of Business,who has argued that“being good”wont necessarily add value to a company.Ind

91、eed,in SG is a tool that,alongside measures such as macro analysis and valuations,can support investment decisions and lead to better risk-adjusted returns,according to Fox.“The best way to look at ESG out-performance is to examine the record of those funds versus that of their non-ESG peers over th

92、e long-est periods more than 10 years if you can,”he says.“This helps to shake out cyclical factors,such as sector-led bubbles and crashes.”Fox highlights that numerous sus-tainable funds have posted top-quartile performance in the main Investment Association sectors for instance,UK All Companies an

93、d Mixed Investment 40%-85%Shares.This was accurate over one,three,five and 10 years to 31 December 2021,according to Trustnet.Some sustainable funds topped these tables over several periods too.“There have been many academic studies on outperformance,but this record is the ultimate test and proof th

94、at it works,”he says.ESG factors will not deliver high performance in and of themselves,Fox stresses.As with any investment style,an individual managers exe-cution can be good,average or poor.But ESG is a set of principles and a framework that,if implemented well,should improve a funds chanc-es of g

95、ood performance,he argues.A whole host of ESG factors could affect returns,from the cost of main-taining stranded fossil-fuel assets such as oil wells to the reputational damage caused by treating workers poorly.But little research establish-ing causal links rather than mere correlations yet exists.

96、One notable study,by Newcastle University and Kuwait Business School in 2020,found a strong positive association between companies propensity to make voluntary disclosures about carbon emissions and their financial performance.Such reporting sup-ported activities such as reducing waste,increasing pr

97、oductivity and opening market opportunities.Fox acknowledges that causation element needs to be“unpicked”further.But he believes the argu-ment that the recent perfor-mance of ESG funds has been affected more by the pandemic and the war in Ukraine than by ESG factors is misdirected.“Like any investme

98、nt style,ESG will have times when it outperforms and times when it underperforms.We underperformed in 2008 and 2009,for instance.That didnt change our methods,but it did make us cautious about our claims,”Fox says.“Funds investing in ESG tend to be in well-established large caps.ESG flows havent mov

99、ed their pric-es yet.Things such as prices over-extending during the pandemic or falling now wont change the worlds structure in five or 10 years time in terms of carbon intensity.We dont know the exact impact that climate change will have on corporate per-formance,but it wont be good.So its best to

100、 be cautious about this.”Foxs advice for traders wanting to get the best performance from ESG investments is to gain a detailed understanding of the areas theyre targeting and to be prepared to“own”their strategy through eco-nomic cycles.“Because youre investing in industries that will become more r

101、elevant such as green energy and moving out of those that will become less relevant such as fossil fuels,this will give a better risk-adjusted performance over the long term,”he says.AEIf youre looking at this advert,then your prospects are too.Advertise with Raconteur in The Times and reach more se

102、nior business decision makers than any other national title.Email to learn more about our calendar of over 80 reports in The Times.THE ASSET SIZE OF ESG EXCHANGE-TRADED FUNDS HAS GROWN MARKEDLY SINCE 2010Assets in ESG ETFs($bn)ETFGI,2022200001920202021February 202240

103、0350300250200150100500The Believer Mike Fox,head of UK sustainable investments at Royal London Asset ManagementThe ScepticTariq Fancy,founder of the Rumie Initiative and former chief investment officer for sustainable investing at BlackRockow times change.A year ago,asset managers were trumpeting th

104、e qualities of environmental,social and govern-ance(ESG)funds,as a slew of data showed that these had beaten their conventional equivalents over sev-eral periods.Today,they have toned down their message after months of Hdisappointing performance;nega-tive stories about firms exaggerating the benefit

105、s of ESG;and the emer-gence of influential and increas-ingly vocal sceptics.Its time to ask seasoned experts in the field with differing views on the merits of ESG investment why theyve adopted such positions.Assessing the merits of ESG investmentE S G I N V E S T M E N T SLike any investment style,

106、ESG will have times when it outperforms and times when it underperformsWe all want to believe that better ESG data leads to better profits and performance But its mostly just marketing in my experienceAbstract Aerial Art via Getty ImagesR A C O N T E U R.N E TT R A D I N G S T R AT EG I E S1110If yo

107、u have an asset with zero volatility,there is no opportunity to make a profit.It doesnt make sense as an investmentThe value of the global cryptocurrency market plummeted by$1tn in May.What impact has this had on traders methods and is there a way back for digital currencies?Dr Ying-Ying Hsieh is as

108、sistant professor of innovation and entre-preneurship at Imperial College London and associate director at its Centre for Cryptocurrency Research and Engineering.She believes that regulation will be a crucial enabler of wider cryp-to-currency adoption,but is con-cerned about its potential for restri

109、cting innovation.Although introducing a regulato-ry framework would require cer-tain aspects of the crypto system to be centralised,Hsieh notes that its highly decentralised nature is a key part of whats made the market so attractive to investors,both retail and institutional.“Decentralisation is a

110、continu-um,”she says.“You could decen-tralise the network.You could decentralise the data.Or,you could decentralise the ownership of the platform.Its not a binary concept.But regulators need to consult the industry about what should and shouldnt be decen-tralised.They must strike the right balance.”

111、Crypto is known to be risky,but traders like volatility.It gives them a chance to make money,particu-larly when they apply sophisticat-ed trading strategies using powerful algorithms and other sophisticated tools.And,as the crypto field gradual-ly becomes more professionalised and controlled,it seem

112、s that Mays crash isnt turning the pro trading community away.If anything,its doing the very opposite.Their collapse sparked panic in the market.The price of bitcoin fell to$26,000,down 60%from its Novem-ber 2021 peak,while ether,the next-biggest cryptocurrency,lost 30%of its value.Coinbase,one of t

113、he largest cryptocurrency exchang-es,reported a loss of$430m in Q1.Although the market has stabilised somewhat since the end of May,the valuations of many cryptocurren-cies remain notably dented.Some key financial institutions,such as the International Monetary Fund,have cited the latest crash as pr

114、oof if more were needed of the inher-ent instability of this asset class.There is an argument that the situation was far worse for individ-ual traders than it was for large-scale investors.Aidan Mott,intel manager at crypto research provid-er Messari,agrees with this view,noting that such volatility

115、 has often resulted in a vigorous rebound for some currencies,par-ticularly bitcoin and ether.“Its affected retail traders more so than it has larger financial n the second week of May,cryptocurrency enthusi-asts around the world watched their screens in awe as the market collapsed before their eyes

116、.In tandem with the broader eco-nomic instability that had started during the final weeks of 2021,cryp-to values had generally been on a downward trajectory in any case.But their decline degenerated into a meltdown that reminded some traders of the beginning of the glob-al financial crisis in late 2

117、007.The immediate cause was the implosion of terra a so-called sta-blecoin,designed to reduce volatili-ty in the crypto market by maintaining a fixed value over time.But,unlike other stablecoins,terra was not pegged to a stable reserve asset such as gold or the dollar.Instead,its stability was based

118、 on algorithms tied to its sister cryptocurrency,luna.When lunas valuation plummeted from about$80(66)at the start of the month to a fraction of a cent,terras followed suit.Juan Roballo/Alamy Stock PhotoJonathan EvansEdouard Hindi,chief investment officer at Tyr Capital,recommends that institutional

119、 investors adopt a bear-market attitude in light of Mays crash.“Focus on the top 10 coins;dont venture off,”he advises.“If you are more risk-averse,you could focus on bitcoin.The general idea runs along similar lines to the standard approach to allocating money during tougher times:focus on attracti

120、ng yield and concentrate on cash-flow-positive names.”Hindi continues:“What you typi-cally do in this climate is move your money from altcoins to bitcoin.You will see the strength of bitcoin relative to the rest of the alt sphere.”Such tactics reflect the increasing professionalisation of cryptocur-

121、rency trading in recent years and the blurring of the boundaries between the traditional financial world and the crypto realm.Hindi expects this trend to continue,with more institutional investors using their expertise in risk management to profit from the instability of crypto markets.This professi

122、onalisation could push retail investors who have formed a sizeable proportion of crypto holders since bitcoins incep-tion in 2009 out of the picture.But such an outcome could serve to reduce volatility and encourage greater uptake by traditional finan-cial players,according to Hindi.“Were going to s

123、ee the players change.More institutions will step in,which will stabilise the market because they are less reactive,”he predicts.“They understand the risks and will be in it for the long term.”Regulation is another way through which cryptocurrencies can regain the confidence of the professional trad

124、ing community.Although this has long been mooted in the crypto world,discussions have yet to trans-late into action on any significant scale.But,less than a day after the terra-luna crash,the US treasury sec-retary,Janet Yellen,reaffirmed her desire to establish a regulatory framework.If she acts ac

125、cordingly,she will have the support of President Biden,who in March had signalled his determination to bring some semblance of control to the market.Unstable coininstitutions,”he says.“Most people using Coinbase or Robinhood dont have the access to the larger liquidity pools or other financial vehic

126、les that large institutions do.“The biggest volatility for bitcoin and ether has resulted in price increases,which is good for insti-tutional traders.If you have an asset with zero volatility,there is no opportunity to make a profit.It doesnt make sense as an investment.”But choosing the right tradi

127、ng strategy for crypto is easier said than done.Consistency and quan-tifiability are at the heart of any successful approach.But,given the instability that comes with the territory,what can traders do to maximise their chances of making solid gains over the long term?C RY P T O C U R R E N C I E SIW

128、ant the power of print media combined with best in class lead generation?Raconteurs new campaign product suite gives marketers the best of both worlds.Email to plan your campaign now.Coindesk,2022THE CRYPTO CRASHBitcoin performance from 16 May to 13 June 202216 May18 May20 May22 May24 May26 May28 May30 May1 Jun3 Jun5 Jun7 Jun9 Jun11 Jun13 Jun20k27.5k25k22.5k30k32.5k