Bruegger Invest Limited
At the forefront of wealth creation.
Since 1997 Bruegger Invest Limited designs, creates and manages investment strategies that deliver absolute return, above the underlying market indices, achieved with less risk.
AvantGarde, our flagship absolute return strategy, is at the forefront of wealth creation.AvantGarde is built on our Iceberg Monetary Theory and our investment competence. Our Iceberg Monetary Theory allows us to better understand past and present prices and glimpse future prices. From our insight how money works and our investment expertise, we have developed our own framework to invest more profitably and safely which we have applied to AvantGarde.
We manage AvantGarde in the simplest possible way. We invest in opportunities for profit we find in long or short equity positions of developed world companies. We build a diversified portfolio of opportunities for profit. If risks outweigh opportunity, the opportunity may be in preserving capital, keeping more cash.
AvantGarde returned 51.37% in 2020 (gross of fees, reference portfolio, USD). In comparison the developed world index, the MSCI World, gained 14.06% and the S&P 500 16.26%.
We offer AvantGarde in the form of managed accounts and investment funds with daily, weekly or monthly liquidity in all major currencies to private and institutional investors. For details, please contact us via the button below.
Absolute Return | Above MSCI World Index | Achieved with less Risk
AvantGarde, launched at the beginning of 2020, is our inhouse designed, researched & managed flagship investment strategy.
The purpose of AvantGarde is to create, preserve and grow wealth.
AvantGarde's primary objective of capital preservation is followed by its secondary goal, a return on capital of 10%. The tertiary aim is maximising return on capital.
AvantGarde invests in opportunities for profit found in long or short equity positions of companies based in the developed world. To meet its objectives, AvantGarde seeks to have an optimal allocation to long and short equities and cash equivalents.
Our stock selection and asset allocation is based on our understanding of money and our investment expertise. Our long positions tend to be where money travels and our shorts where money is leaving. The Iceberg Monetary Theory framework allows us to recognise when communities, experiencing shifts in their disposable income, change their purchasing habits.
We purchase only what we understand as far as possibly we can. We rely on our own proprietary research, with no use of any computer model.
Iceberg Monetary Theory
Our Iceberg Monetary Theory helps us to better understand past and current price levels and allows us to glimpse future prices by concerning ourselves with what money is, how it works, how much there is and where and when it travels.
The Iceberg Monetary Theory looks at the monetary system that changed from the 1944 Bretton Woods monetary system resting on gold, the US dollar and a fixed exchange rate system into a global liquidity system composed of official and private liquidity.
Global liquidity is comparable to the structure of an iceberg. The tip is the official liquidity provided by the national monetary authorities in public transactions. The bottom ice, hidden from view below sea level, is the dollar denominated credit-based liquidity created by the international financial sector in private transactions.
Global liquidity, quantitatively dominated by its private credit-based liquidity component, is qualitatively inferior to its preceding money-based monetary model. Global liquidity is unstable since its supply depends on risk appetite and risk/reward considerations of participating international financial institutions.
Because the supply of private liquidity is systemically unstable, the system tends to shift from periods of over- to undersupply and visa versa. Liquidity may even entirely dry up as in 2008 and 2020. The more pronounced and permanent, the stronger and longer is the gravitational pull private liquidity exerts on everything from prices of currencies, bonds, equities to commodities, on economies as well as on income distribution.
Our Iceberg Monetary Theory is based on and developed from the quantity theory of money and its premise that money supply and price levels are in direct proportion to each other.
Making informed investment decisions.
Spotlight on research | Urs Bruegger | 12 January 2021 | Follow @ursbruegger on Twitter
Hopes of an economic recovery are reverberating through equity, commodity and bond markets. But will these predictions hold true?Read full article
The Covid-19 impact
21 December 2020 | Bruegger Invest Limited
One of the phenomena of Covid-19 is the disappearance of demand for money.
Banks in the US and Europe have seen a surge in deposits as households and businesses have reacted to the economic fallout from the pandemic by putting more money aside.
Swelling deposits have caused a ballooning money supply. In the US alone, M2 money stock, a measurement of official liquidity, has increased by more than 20% since February. The surge in deposits was driven primarily by households with balances below $2,500, according to an article published by the Wall Street Journal.
While deposit liabilities of US commercial banks have risen sharply, loans on the asset side of their balance sheets have not. One explanation is that banks have become more careful about lending to riskier clients. Another is an absence of opportunity for putting their deposits to work.
Alongside the increases in US money supply, global liquidity has improved somewhat as well. We attribute the broadening of the US stock market rally, the rising US ten-year treasury yields, the falling dollar and the partial recovery in emerging market asset prices to the current easing of funding conditions.
Behind this temporary relief however the trend of weakening global economic growth that began in 2008, now compounded by Covid-19, continues unabated.
A glance into 2021
21 December 2020 | Bruegger Invest Limited
2020 has proven so far an excellent year for AvantGarde.
Looking ahead, mounting debt and the lack of growth will become major issues in 2021.
An obvious solution to solve the debt problem is to inflate it away. The monetary authorities in Japan, Europe and the US have been unsuccessfully trying to bring inflation back on for years. The choice for the new US treasury secretary, Ms Yellen, is not instilling hope that the riddle of absent inflation is finally being solved.
There is truth in the saying things have to get worse before they get better. The worsening situation will eventually force the world to look for different ways to overcome its massive problems.
2021 can go several ways for equity investors. Our three scenarios for 2021 are continuation, disruption and reversal.
The first scenario of continuation is the most likely. The trend that has seen cyclically adjusted price to earnings ratio (CAPE) lifted from 23 to 33 since 2011 is to go on. The second scenario of disruption is the potentiating effect the fallout in jobs, disposable incomes, tax revenues, among insolvencies, has on a inherently unstable monetary system dependent on the private supply of liquidity, the fuel for stock markets. The third scenario is of an economic recovery that leads to a reversal in equity valuations and long term interest rates.
Success in 2021 will depend on getting the balance right. Although equity valuations are likely to continue to move higher into 2021, the precarious underlying economic and monetary conditions leave financial markets vulnerable to liquidity shocks. The last scenario of a reversal is the most unlikely. US long term real yield expectations indicators paint a bleak economic future. The world's economic situation is so dire this possibility cannot be entirely discounted.
History of money on the dollar as the reserve
01 December 2020 | Bruegger Invest Limited
The Bretton Woods agreement of 1944 established a new global monetary system. In the new world order, the dollar replaced the gold standard as the global currency. By doing so, America became the world's dominant economic power as only the US could issue dollars.
The eurodollar market, established in the City of London in the 1950s, is the progenitor of today's global liquidity system with its official and private liquidity components. The eurodollar market, the first private liquidity market, was as much an innovation to re-establish the City as the world's foremost financial centre as a response to the need for dollars outside of the US to finance ever faster growing international trade. Eurodollars are deposit liabilities denominated in US dollars and short-term obligations to pay dollars.
Just before 1995, JP Morgan released its RiskMetrics, a methodology to calculate Value at Risk. RiskMetrics allowed banks to turn millions into billions through nothing more than balance sheet acrobatics. VaR revolutionised and Americanised the previously quiet London-based eurodollar market model, turning it into an explosively fast growing private liquidity system in the US. Credit-based dollar liquidity swept the US housing and equity markets. While the dotcom bubble burst in 2000, the housing boom continued into 2007 albeit largely driven by non-US banks after 2000.
In 2001 non-US banks in Europe, Japan and elsewhere entered the private liquidity market, quickly becoming the largest providers of private liquidity to international borrowers. The US real estate bubble from 2002-2007 for reasons of sourcing mortgage-backed collateral, the UK housing bubble, the emerging market asset price boom, the 2008 financial crises and the 2011 eurozone sovereign debt crisis all were directly linked to European banks' balance sheet expansion and contraction.
Most banks stopped providing liquidity from mortgaged-backed securities after 2008. The 2011 eurozone debt crisis removed much of the sovereign debt as acceptable collateral, leaving US treasuries to fill the gap. The ensuing dollar shortage has left the world bereft of growth.
The shape of the dollar at the heart of the monetary system established in 1944 has changed almost out of all recognition - but its role has not. The US dollar, once global money convertible into gold, has become national money with a global responsibility. The parallel international credit-based dollar, no longer money in the traditional sense, has largely replaced the official dollar as the global reserve.
Note from the CEO
Urs Bruegger | Bruegger Invest Limited
"I started my professional career in Japanese equities at Nomura in Japan's bubble economy of the 1980s. I was in US equities during the dotcom bubble and in emerging market fixed income and equities during the 2002-2011 emerging market boom.
I formulated my Iceberg Monetary Theory in my quest to the causes of instabilities encountered throughout my professional career and developed a framework to invest more safely and profitably.
Such instabilities have become the norm. The sharper and more permanent, the longer the gravitational pull acts on the prices of currencies, commodities, inflation, equity valuations as on the economy and income distribution.
The world is one connected, permanently synchronising system. The dollar as the reserve sits at the top of the global financial architecture. The drivers of this system are the purveyors of private liquidity.
We arrange our opportunities for profit as in a cupboard with the drawers organised into long and short opportunities for profits. Our Iceberg Monetary Theory framework tells us when what to pull out of the drawers and when to put it back again."