Effects of the Interest Rate Turnaround on the Investment Behavior of Institutional Investors
Latta, Philipp (2023)
Latta, Philipp
2023
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2023121437402
https://urn.fi/URN:NBN:fi:amk-2023121437402
Tiivistelmä
The interest rate policy of the European Central Bank is one of the most significant factors influencing the economy and the financial markets in general. After the extremely long zero and low interest rate policy following the 2008 financial crisis, the interest rate turnaround in June 2022 represents a completely changed macroeconomic situation for both the economy and the players on the financial markets.
Thus, the increase in the key interest rate in June 2022 is an absolute novelty, especially after the period of zero interest rate policy in the main refinancing rate. Therefore, the entire society, including nation states, will have to adjust to a completely changed macroeconomic situation. The ordinary consumer notices the increase in interest rates due to many factors: Real estate purchases are becoming more expensive, the stock markets are weakening, and overnight money is again yielding interest. The big question of this Bachelor thesis is how institutional investors, the professionals, and experts of the financial markets, have reacted to this changed macroeconomic situation. For this purpose, an expert interview was conducted by one of the largest insurance groups in Europe with net assets invested in the financial markets of 55 to 60 billion euros. Furthermore, the asset allocation of institutional investors with at least a net worth of 500 million euros invested in the financial markets were analyzed. Conclusions were drawn from these empirical data.
Therefore, this Bachelor’s thesis attempted to answer how institutional investors have reacted to the completely changed macroeconomic situation and what strategy they are pursuing. Ultimately, it should also be about what private investors can learn from the investment behavior of institutional investors and their reaction to the completely changed macroeconomic environment. In the end it should also help private investors to create a long-term investment strategy and to optimize their private wealth creation.
Thus, the increase in the key interest rate in June 2022 is an absolute novelty, especially after the period of zero interest rate policy in the main refinancing rate. Therefore, the entire society, including nation states, will have to adjust to a completely changed macroeconomic situation. The ordinary consumer notices the increase in interest rates due to many factors: Real estate purchases are becoming more expensive, the stock markets are weakening, and overnight money is again yielding interest. The big question of this Bachelor thesis is how institutional investors, the professionals, and experts of the financial markets, have reacted to this changed macroeconomic situation. For this purpose, an expert interview was conducted by one of the largest insurance groups in Europe with net assets invested in the financial markets of 55 to 60 billion euros. Furthermore, the asset allocation of institutional investors with at least a net worth of 500 million euros invested in the financial markets were analyzed. Conclusions were drawn from these empirical data.
Therefore, this Bachelor’s thesis attempted to answer how institutional investors have reacted to the completely changed macroeconomic situation and what strategy they are pursuing. Ultimately, it should also be about what private investors can learn from the investment behavior of institutional investors and their reaction to the completely changed macroeconomic environment. In the end it should also help private investors to create a long-term investment strategy and to optimize their private wealth creation.