The Letter - Bordier & Cie

The Letter
______________________
Number II – 2009
B ORDIER & C IE
Banquiers privés depuis 1844

Preamble: Economic scenario
•
•
•
Growth
Rates
Currencies
Hedging against
future infl ation
1. Introduction: anticipation is vital
2. Gold
3. Commodities
4. Property
5. Equities
6. Focus on infl ation and growth
7. Infl ation-linked government bonds
8. Conclusion: it will soon be time to buy infl ation-linked
bonds

Economic scenario
Growth
In the United States, the ISM manufacturing and services indexes
have become slightly more encouraging, as are most of the Fed’s regional
surveys. The weakness of housing investment is beginning to
spread to other sectors. Consumers will have to contend with two
problems: fi rstly, the steep rise in unemployment and an inadequate
savings rate; secondly, the house price bubble which gave homeowners
the impression of being rich has burst, to judge by the stocks of
houses for sale with no buyers forthcoming. Recession in 2009: -2.5
to -2.9%. In the euro zone, the EU Commission’s global index of
economic sentiment and the IFO index of German industrial confi -
dence remain at very low levels. There is no longer any growth driver.
Household morale is too low to expect any signifi cant rebound of
consumer spending. The recession is likely to reach -2.4 to -2.8% in
2009 if the euro remains stable. In Japan, core CPI suggests incipient
defl ation and the GDP defl ator remains in negative territory; Japan is
at risk of another period of defl ation. The future is still looking bleak
with a confi rmed downturn of exports to all the Asian countries and
the United States, while consumer spending is not getting off the
ground as yet. Capital spending by corporations is collapsing. The
recession will be in the order of -5.4 to -5.8% in 2009.
Rates
In the United States, the Fed funds target rate was cut by 500 basis
points between September 2007 and 16 December last. The Fed is
fi ghting hard against recession; the collapse of the oil price is also
generating rapid disinfl ation and some observers are already predicting
defl ation. The Fed has put in place a programme to buy up treasury
bonds on the secondary market in order to hold yields down to
a fairly low level. In Europe, the ECB was obliged to act in the light
of the onset of recession and the fi nancial crisis by cutting its base
rate to 1% on 7 May last. The ECB has also decided to buy up securitized
bonds of the “Pfandbrief” (mortgage bond) type in a programme
2
which may involve expenditure of as much as EUR 60 billion. Ten-
year bond yields may rise to 4% before the year is out. In Japan, the
BoJ has to all intents and purposes reverted to its zero interest rate
policy by cutting its base rate to 0.1% on 19 December last. Ten-year
JGB yields may rise to 1.8% in 2009.
Currencies
The USD index gained 21% between March 2008 and March 2009.
The main factors cited to explain this strong upturn are: a sharp recovery
of the trade balance, reversal of the commodity price trend,
together with the determination shown by the Fed and Treasury to
rescue some fi nancial institutions, foremost among them Bear Stearns,
Fannie Mae and Freddie Mac. The rise of the dollar seems to have
run out of steam. Investors are now focussing again on the double
defi cit (balance of payments on current account with a defi cit equivalent
to as much as 5% of GDP, galloping deterioration of the budget
balance running at 12.9% of GDP for the 2008/2009 fi nancial year).
Even if the ECB’s base rates remain above those of the Fed and the
recession in the euro zone is likely to be very much in line with that
of the United States this year, we still believe that the euro hit a lasting
high at USD 1.55 to 1.59 in March 2008. This year’s trading range will
be 1.25 to 1.35. For the past two years, the yen has been a victim of
excessively low short-term rates which encouraged carry trade transactions
(borrowing in yen to invest elsewhere) by foreign investors. This
practice disappeared with the onset of the subprime loans fi nancial crisis
which generated risk aversion. The yen has therefore gained fresh
vigour, rising from 110 to 96 per USD since early August 2008. We
now expect a trading range of 95 to 105 for the rest of the year. The
GBP bottomed out last January. The SNB is determined to maintain
a parity of CHF 1.50 to 1 euro.
3

How to hedge
against future infl ation
1. Introduction: anticipation is vital
2. Gold
3. Commodities
4. Property
5. Equities
6. Focus on infl ation and growth
7. Infl ation-linked government bonds
8. Conclusion: it will soon be time to buy infl ation-linked bonds
1. Introduction : anticipation is vital
United States, euro zone, Switzerland, United Kingdom, Japan: deep
recession is everywhere. Back in July 2008 observers had still been
forecasting the risk of stagfl ation with a barrel of crude priced at
USD 150, but in the meantime many countries have either gone into
defl ation or are about to do so. Then again the property crisis in
the United States has caused a serious deterioration of bank balance
sheets on both sides of the Atlantic.
To fi ght the fi nancial crisis and recession, the central banks have
cut their base rates to historically low levels, close to zero. As this
did not seem enough to drag us out of the crisis, the central banks
have even begun to practice quantitative easing policies, by which
is meant that they are buying up massive quantities of government
bonds, commercial paper or property-backed securities (commonly
known as toxic assets). All of these purchases are helping to swell
money supply hugely and in fact represent a return to the old habit
of printing new bank notes. In the course of history that practice
has always preceded bouts of infl ation; infl ation therefore awaits us
4
round the corner, sooner or later. To hedge against infl ation, economic
literature identifi es gold, commodities, property and equities;
more recently, infl ation-linked issues have made their appearance on
the bond market.
Our approach in this article will be to study the performance of
these different vehicles in relation to the consumer price index in the
United States (the familiar CPI) over a period of forty years in principle.
We will endeavour to refi ne our analysis by looking at six periods
typifi ed by different levels of infl ation, with an imminent or existing
recession or on the contrary a period of vigorous growth. We have
focussed on the United States because that country has the benefi t of
long statistical series.
15
10
5
0
8
6
4
2
0
INFLATION IN THE UNITED STATES YEAR ON YEAR VARIATION
FROM 01/01/69 TO 31/12/78 15 15 FROM 01/01/79 TO 31/12/88
69 70 71 72 73 74 75 76 77 78
FROM 01/01/89 TO 31/12/98
89 90 91 92 93 94 95 96 97 98
8
6
4
2
0
10
5
0
5
10
6
4
2
0
-2
5
0
79 80 81 82 83 84 85 86 87 88
SINCE 01/01/99
99 00 01 02 03 04 05 06 07 08 09
15
10
5
0
6
4
2
0
-2
Source: Thomson Datastream

200
150
100
INDEXED INFLATION IN THE UNITED STATES
FROM 01/01/69 TO 31/12/78 200 180 FROM 01/01/79 TO 31/12/88
50
69 70 71 72 73 74 75 76 77 78
US CPI - ALL URBAN SAMPLE: ALL I
140
130
120
110
100
90
FROM 01/01/89 TO 31/12/98
89 90 91 92 93 94 95 96 97 98
US CPI - ALL URBAN SAMPLE: ALL I
150
100
50
140
130
120
110
100
90
6
160
140
120
100
140
130
120
110
100
80
79 80 81 82 83 84 85 86 87 88
US CPI - ALL URBAN SAMPLE: ALL
90
SINCE 01/01/99
99 00 01 02 03 04 05 06 07 08 09
US CPI - ALL URBAN SAMPLE: ALL I
180
160
140
120
100
80
140
130
120
110
100
90
Source: Thomson Datastream
The CPI rose by 490% over the period covered by our study with
steep infl ation in the 70s and 80s, reaching a peak of 15% in 1980.
2. Gold
INDEX-LINKED INFLATION AND OUNCE OF GOLD INDEXED SINCE 19/03/73
1400
1200
1000
800
600
400
200
0
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
US CPI - ALL URBAN SAMPLE: ALL ITEMS NADJ
Gold Bullion LBM U$/Troy Ounce
1400
1200
1000
800
600
400
200
Source: Thomson Datastream
0
The chart for gold begins on 19 March 1973, a historical date on
which a majority of major developed countries decided to allow their
exchange rates to fl oat freely. On that day one ounce of gold was
priced at USD 81.70. If you were clever enough to buy 100 ounces
of gold on 20 March 1973 at a price of USD 8,170, your investment
would now (18.05.2009) be worth USD 93,000, a multiple of 11.4 as
against infl ation multiplied by 3.9 over the same period.
However, it would be wrong to reach a hasty conclusion. If you had
been ill-advised enough to buy your 100 ounces of gold in January
1980 (average price for the month USD 660, peaking at USD 835 on
18 January), your investment of USD 66,000 would have been multiplied
by just 1.41, while infl ation rose by a factor of 3.5 between
31.12.1979 and 30.04.2009. What is more in the 1990s gold seriously
underperformed infl ation with -30% for gold against infl ation at
+35%. The buyer of gold must therefore adopt a very long-term buy
and hold strategy; although such a strategy may well be suitable for a
pension fund, it is unlikely to suit an individual saver.
In our opinion, using gold to hedge against infl ation is heavily dependent
on the right buy timing, which is hard to determine.
3. Commodities
We will take three examples: the index of farm prices and metal prices
over forty years, together with the price of oil since its fi rst inclusion
in the Datastream database on 05.02.1982.
7

600
550
500
450
400
350
300
250
200
150
100
50
INDEX-LINKED INFLATION IN THE UNITED STATES
AND INDEX-LINKED SPOT FARM PRICE
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
US CPI - ALL URBAN SAMPLE: ALL ITEMS NADJ
S&P GSCI Agriculturl Spot - PRICE INDEX
900
800
700
600
500
400
300
200
100
0
INDEX-LINKED INFLATION AND CRB SPOT METALS INDEX
8
600
550
500
450
400
350
300
250
200
150
100
50
Source: Thomson Datastream
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
US CPI - ALL URBAN SAMPLE: ALL ITEMS NADJ
CRB Spot Index Metals - PRICE INDEX
900
800
700
600
500
400
300
200
100
Source: Thomson Datastream
0
INDEX-LINKED INFLATION AND INDEX-LINKED PRICE PER BARREL OF OIL
450
400
350
300
250
200
150
100
50
0
82 84 86 88 90 92 94 96 98 00 02 04 06 08
US CPI - ALL URBAN SAMPLE: ALL ITEMS NADJ
Crude Oil-WTI Near Month FOB U$/BBL
9
450
400
350
300
250
200
150
100
50
Source: Thomson Datastream
Farm prices are extremely volatile. Quite recently, the spot farm price
index rose from 214 in August 2006 to 483 in June 2008 (+116%), before
falling back to 247 in December 2008 (down 49% in six months).
Especially between 1982 and the present day farm prices have completely
failed to keep pace with the rate of infl ation.
The industrial metals index did not beat infl ation at any time between
1981 and 2004. The price of metals took off between 2006 and early
2008 before suddenly falling back; index on 31.12.2005: 260, index
on 04.05.2007: 476 (+83%), index on 19.12.2008: 167 (-65%). Here
again we are confronted with steep price volatility and the opportunity
of beating infl ation existed for two years only.
The performance of the West Texas barrel price has been still more
disappointing; this protection against infl ation only functioned between
early 2007 and autumn 2008 under conditions of extreme volatility
with the barrel price rising from USD 38 on 18.01.2007 to 144
on 11.07.2008 (+279%), going on to fall back to 36 on 26.12.2008
(-75%). Once again, excellent timing is imperative to buy crude oil as
a hedge against infl ation.
0

4. Property
INDEX-LINKED INFLATION AND INDEX-LINKED HOUSE PRICES OVER 40 YEARS
1100
1000
900
800
700
600
500
400
300
200
100
0
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
US CPI - ALL URBAN SAMPLE: ALL ITEMS NADJ
US MEDIAN PRICE OF EXISTING ONE-FAMILY HOMES SOLD CURN
Over forty years, the trend of house prices has easily beaten infl ation,
despite the correction which began in 2005 and currently stands
at around 27%. Analysis of each ten-year tranche shows that house
prices either beat or equal infl ation.
10
1100
1000
900
800
700
600
500
400
300
200
100
Source: Thomson Datastream
INDEX-LINKED INFLATION IN THE USA AND INDEX-LINKED MEDIAN HOUSE
PRICE
250 FROM 01/01/69 TO 31/12/78
250 180 FROM 01/01/79 TO 31/12/88 180
200
150
100
50
69 70 71 72 73 74 75 76 77 78
US CPI - ALL URBAN SAMPLE: ALL I
US MEDIAN PRICE OF EXISTING ONE-
160
140
120
100
80
FROM 01/01/89 TO 31/12/98
89 90 91 92 93 94 95 96 97 98
US CPI - ALL URBAN SAMPLE: ALL I
US MEDIAN PRICE OF EXISTING ONE-
200
150
100
50
160
140
120
100
80
160
140
120
100
80
79 80 81 82 83 84 85 86 87 88
US CPI - ALL URBAN SAMPLE: ALL
US MEDIAN PRICE OF EXISTING ONE
180
160
140
120
100
80
SINCE 01/01/99
99 00 01 02 03 04 05 06 07 08 09
US CPI - ALL URBAN SAMPLE: ALL I
US MEDIAN PRICE OF EXISTING ONE-
160
140
120
100
80
180
160
140
120
100
80
Source: Thomson Datastream
0
300
280
260
240
220
200
180
160
140
120
100
GREAT BRITAIN: INFLATION AND INDEX-LINKED HOUSE PRICES
80
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
UK CPI-HARMONISED EUROPEAN UNION BASIS EST.D PRE-97 2005=100
UK HALIFAX HOUSE PRICE INDEX - NEW HOUSES
UK HALIFAX HOUSE PRICE INDEX - EXISTING HOUSES
150
140
130
120
110
100
90
80
GREAT BRITAIN: INFLATION AND INDEX-LINKED HOUSE PRICES
300
280
260
240
220
200
180
160
140
120
100
80
Source: Thomson Datastream
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
UK CPI-HARMONISED EUROPEAN UNION BASIS EST.D PRE-97 2005=100
UK HALIFAX HOUSE PRICE INDEX - NEW HOUSES
UK HALIFAX HOUSE PRICE INDEX - EXISTING HOUSES
150
140
130
120
110
100
90
80
Source: Thomson Datastream
Looking now at Great Britain, the situation is more complex. Since
1999, house prices have easily beaten infl ation despite a sharp correction.
On the other hand, between 1989 and 1999 infl ation rose by
30% more than house prices.
11

This means that house prices are distinctly less volatile than those of
commodities, but investors must not buy property during a speculative
price bubble.
5. Equities
In principle, the equity market does not like infl ation; this is because
PER (price/earnings ratio) fi gures narrow when infl ation is high; conversely
PERs widen when infl ation is very low.
How can this ratio between PER and infl ation be explained? Acceleration
of infl ation will encourage the central bank to raise its base
rate. High interest rates make the fi nancing of heavily indebted corporations
more diffi cult in cash fl ow terms.
16
14
12
10
8
6
4
2
0
-2
RELATIONSHIP BETWEEN INFLATION AND PER
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
CPI VAR. 1 AN
S&P 500 COMPOSITE - PER(R.H.SCALE)
Source: Thomson Datastream
However, some economists maintain that during periods of high infl
ation, companies are able to increase their invoiced prices faster than
before, in other words pricing power rises; this is good for profi ts.
12
45
40
35
30
25
20
15
10
5
For the record, Anglo-Saxon investors were greatly infl uenced by a
book written by Jeremy Siegel, a professor of fi nance at Pennsylvania
University, entitled “Stocks for the Long Run” published for the fi rst
time in 1994. In the main, beginning his research in 1802 (sic), Siegel
claims that for 190 years (re-sic), equities brought a return on investment
which beat infl ation by an average of 6.5 to 7%.
For the time being, we will simply examine what has happened in the
past forty years.
1600
1400
1200
1000
800
600
400
200
0
INDEX-LINKED INFLATION IN THE UNITED STATES
AND S&P 500 INDEXED OVER 40 YEARS
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09
US CPI - ALL URBAN SAMPLE: ALL ITEMS NADJ
S&P 500 COMPOSITE - PRICE INDEX
13
1600
1400
1200
1000
800
600
400
200
Source: Thomson Datastream
The S&P 500 easily beats infl ation despite the correction in 2000-
2003 and despite the more recent correction which has been under
way since 2007.
0

6. Focus on infl ation and growth
6.1 Period 1972-1974
130
125
120
115
110
105
100
95
INFLATION
OUNCE OF GOLD (R.H.SCALE)
METALS INDEX (R.H.SCALE)
FOCUS ON 1972-1974
1972 1973 1974
14
FARM PRICE INDEX (R.H.SCALE)
HOUSE PRICES (R.H.SCALE)
450
400
350
300
250
200
150
100
S&P 500(R.H.SCALE) Source: Thomson Datastream
Infl ation climbed by 26% over a three-year period. Year on year,
growth moved from 7.5% in early 1973 to -2% at the end of 1974.
Commodities and property have made faster gains than infl ation,
while the equity market which correctly anticipated the recession reported
disastrous performance.
50
6.2 Period 1977-1979
135
130
125
120
115
110
105
100
95
INFLATION
OUNCE OF GOLD (R.H.SCALE)
METALS INDEX (R.H.SCALE)
FOCUS ON 1977-1979
1977 1978 1979
15
FARM PRICE INDEX (R.H.SCALE)
HOUSE PRICES (R.H.SCALE)
400
350
300
250
200
150
100
S&P 500(R.H.SCALE) Source: Thomson Datastream
Infl ation climbed by 30% over three years. Growth slipped from 7%
in late 1978 to -1.5% in the autumn. Gold easily beats infl ation, commodities
and property are practically on an equal footing, while the
equity market which held up well remained stable and was therefore
outstripped by 30% by infl ation.
50

6.3 Period 1987-1990
125
120
115
110
105
100
95
FOCUS ON 1987-1990
1987 1988 1989 1990
INFLATION
OUNCE OF GOLD (R.H.SCALE)
METALS INDEX (R.H.SCALE)
FARM PRICE INDEX (R.H.SCALE)
HOUSE PRICES (R.H.SCALE)
180
170
160
150
140
130
120
110
100
S&P 500(R.H.SCALE) Source: Thomson Datastream
Infl ation advanced by 19% over the four-year period. Growth was
in the range of 2.5% to 4.25% between 1987 and early 1990, before
turning negative in early 1991. The economic trend during this period
may be described as moderate stagfl ation. In this environment,
equities held up well, while infl ation was 30% higher than the price
of gold.
16
90
80
6.4 Period 1997-1999
106
105
104
103
102
101
100
99
INFLATION
OUNCE OF GOLD (R.H.SCALE)
METALS INDEX (R.H.SCALE)
FOCUS ON 1997-1999
1997 1998 1999
FARM PRICE INDEX (R.H.SCALE)
HOUSE PRICES (R.H.SCALE)
200
180
160
140
120
100
S&P 500(R.H.SCALE) Source: Thomson Datastream
This was a dream period with infl ation running at less than 6% over
the two years and average growth in the order of 4%. Commodities
were beaten heavily by infl ation, while property gained in relation to
infl ation and the equity market took off by an impressive 90%.
17
80
60

6.5 Period 2004-2006
112
110
108
106
104
102
100
98
INFLATION
OUNCE OF GOLD (R.H.SCALE)
METALS INDEX (R.H.SCALE)
FOCUS ON 2004-2006
2004 2005 2006
FARM PRICE INDEX (R.H.SCALE)
HOUSE PRICE(R.H.SCALE)
260
240
220
200
180
160
140
120
100
S&P 500(R.H.SCALE) Source: Thomson Datastream
Infl ation rose by 9% over a two-year period. Growth slipped gradually
from 4.1% to 2.4%. The recession to come was not yet perceptible.
A new factor now came onto the scene: the ferocious appetite
of the emerging countries, especially China, for commodities. All the
forms of hedging easily beat infl ation, including equities, with a special
mention for industrial metals and gold.
7. Infl ation-linked Government bonds
The number of States which offer at least one infl ation-linked bond
traded on the bond market is limited and currently stands at twelve.
The fi rst market for infl ation-linked state bonds was opened by Great
Britain in 1981, in particular to strengthen the government’s credibility
in its fi ght against infl ation at a time when this was particularly
high.
The basic principle of an index-linked bond is to vary the value of
18
80
60
the coupons and redemption of the principal in the light of the trend
of a reference infl ation index.
There are three important variables which differ from one issuing
country to another:
• The frequency of the coupon which may be quarterly, halfyearly
or annual.
• The monthly or quarterly reference infl ation rate which will
infl uence the price of the bond on the secondary market.
• The existence or otherwise of a redemption guarantee at par
for the principal in the event of defl ation.
Because of the hedge against the infl ation risk, the indexed bond
has a signifi cantly lower nominal coupon than that of a conventional
bond with an equivalent time to maturity (see the example below of
cash fl ow simulation).
In the United States, the Treasury Department issued the fi rst loan indexed
on the Consumer Price Index (CPI) on 29 January 1997; this type
of loan has been called Treasury Infl ation-Protection Securities (TIPS).
The index-linked coupons are paid every six months and a guarantee
on redemption of the principal in the event of defl ation is provided.
In France, the Government issued for the fi rst time on 15 September
1998 a bond Obligation Assimilable du Trésor (OAT) indexed on
the national rate of infl ation (OATi), this being calculated excluding
the tobacco price. In October 2001, the State issued an OAT€i, with
the harmonized price index for the euro zone as its reference index.
To illustrate the difference between the cash fl ow generated by a conventional
bond and an infl ation-linked bond we have designed a simplifi
ed example: during the ten year lifetime, linear infl ation of 2%
per year, with an annual coupon, no reinvestment of the coupons
paid, nominal rate of 4% for a conventional OAT, an initial nominal
19

ate of 2.5% for an OATi, both issues being kept until maturity and
having a principal sum of EUR 10,000.
Cash-fl ow of the conventional bond:
• 10 coupons of EUR 400 = EUR 4000
• Redemption of the principal EUR 10,000
• Loss on the principal because of aggregate infl ation of 21.9%
= EUR 2190
• Result of the investment EUR 14,000 – EUR 2190 =
EUR 11,810.
Cash-fl ow of the index-linked issue:
• 10 indexed coupons ranging from EUR 256.25 in the fi rst year
to EUR 320 in the tenth year = EUR 2870.80
• Redemption of the principal at EUR 12,190
• Result of the investment EUR 12,190 + EUR 2870.80 =
EUR 15,060.80
Clearly, the higher the rate of infl ation the more advantageous it will
be to hold index-linked bond issues.
114
112
110
108
106
104
102
100
98
COMPARATIVE TREND OF PRICES OF AN OAT AND OATI
96
2002 2003 2004 2005 2006 2007 2008 2009
OAT FRANCE 2003 4% 25/04/13 - DEFAULT PRICE
OAT-I FRANCE 2003 2 1/2% 25/07/13 INDXLK. - DEFAULT PRICE
20
114
112
110
108
106
104
102
100
98
96
Source: Thomson Datastream
8. Conclusion: it will soon be time to buy infl ation-linked
bond issues
Gold provides a long-term hedge against infl ation, but buy timing
is vitally important. Moreover the two steep rises in the gold price
are not due solely to infl ation because the fi rst was set in motion by
the hostage taking in Teheran which sparked off an oil price shock,
followed by infl ation, while the second was motivated by economic
euphoria and then by the crisis of the American banking system. In
view of the recent gold price trend we believe that an investor who
buys gold now would be taking a very bold step.
Commodities are an appropriate way of hedging against infl ation at
a time when it is accelerating. They are at one and the same time the
cause and the consequence of infl ation. However, their price trend
depends on factors which have little to do with infl ation: fl oods,
droughts, extremely high growth in some emerging crises, geopolitical
crises, inadequate relationship between supply and demand on
some markets.
Property certainly provides good protection against infl ation unless
it is acquired during a speculative bubble. However, property is an
asset which lacks liquidity and for family or other reasons it is often
hard to take the profi ts on such an asset.
The debate over equities as a vehicle to fi ght infl ation is still open.
To overcome the obstacle of narrowing PERs and rising interest rates
against a background of steep infl ation, stock picking would seem
to be vital; of course we must identify companies which manage to
pass on price rises. Equities are the best asset in periods of economic
growth with low infl ation.
Infl ation-linked bonds by their very nature provide effective protection
against infl ation and enable the investor to avoid damage
caused by infl ation which the bond market has not anticipated cor-
21

ectly. Unlike real property for instance this is a highly liquid asset
even if many investors adopt a buy and hold strategy on these bonds.
Unfortunately, the Swiss Confederation has not yet issued an infl ation-linked
bond; this creates an exchange risk for a Swiss resident
who buys TIPS or OATi.
22
Jacques Nicola / CP / May 2009

WE ARE AT YOUR DISPOSAL
PARTNERS Pierre PONCET
Gaétan BORDIER
Grégoire BORDIER
EXECUTIVE BOARD David HOLZER
Michel JUVET
François KOESSLER
INVESTMENT MANAGERS
Adrien BALZLI
Bernard CHOLLET, Nyon
Bertrand CLAVIEN
Roman DOUBROVKINE
Martin DURST, Zürich
Niloufar EGHTEDAR
Michael EGLI, Bern
Sébastien GIOVANNA, Zürich
Joseph GOMEZ
Véronique GROSSEN
Markus HAUSHERR, Zürich
Carine IMHOF
Frank ISOZ
François JACOBI
Eric JOYAU
Patrice LAGNAUX, Zürich
Bernadette LARDI
Hubert LECLERC
Ruth MERCIER, Nyon
Manuel MORA
Ernest MORGELI, Nyon
René MOZER
Philippe NABAA
Lisa NATALINI TISSOT, Nyon
Thierry PERRET
Daniel ROTH, Bern
Philippe RUDLOFF
Stephan SCHNYDER, Bern
Aloïs SOMMER, Zürich
Patrick STOCKHAMMER
Masaki TSUNOOKA
EXTERNAL MANAGERS DEPARTMENT Pierre-Louis CHARDIER
FINANCIAL RESEARCH Rafaël ANCHISI
Loïc BHEND
Pascale BOYER BARRESI
Christophe LABORDE
Nicolas MASSON
Jacques NICOLA
Daniel PELLET
Frédéric POTELLE
MARKETING Radan STATKOW
Camille BORDIER
LEGAL AND TAX ADVICE Dominique FELLAY
Jérôme MACHEREL
ACCOUNTING/CREDITS Veronica VERDIAL
FOREIGN EXCHANGE & TREASURY Juan-Luis CALERO
CAPITAL MARKETS Reynald DUCOMMUN
BANKING SERVICE Didier GRANDJEAN
TRANSFERS Yves FOURNET
CASHIER Jean-Marc SCHWAB

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