How Germany’s Jens Ehrhardt is ‘ready for all outcomes’
‘Be prepared’ is one of the golden principles behind the global scout movement, founded by Robert Baden-Powell.
For Dr Jens Ehrhardt, officer and secretary of the World Scout Foundation, being prepared for various market and economic conditions has no doubt been useful in his professional life, as one of Germany’s most experienced asset managers.
He founded Dr Jens Ehrhardt group in Munich in 1974, as Germany’s first stand-alone asset manager.
He since grew DJE Kapital AG to about 100 staff and €10bn total assets. Ehrhardt personally manages €2bn of this in various mandates – inhouse and for third parties – various regions, asset classes, and both funds and funds of funds.
These must surely be among the most difficult times for fund investors and fund buyers such as Ehrhardt to ‘be prepared’ – not least because of ‘binary events’ such as Greece’s elections yesterday. Markets have reacted violently to sometimes unexpected outcomes of such political events, or perceived political paralysis.
Speaking before the past week’s various binary events, Ehrhardt said he is alert to risks and potential rewards of such moments – and prepared for them.
“When binary outcomes are possible, you have to be very flexible, not just fully invested all the time.
“I have been in this business for more than 40 years, but now it is difficult because everything is so dependent on so many political decisions, and you do not know what they are going to do.
“For example [ECB President Mario Draghi] had said he would pursue a Deutsche Bundesbank policy, and his every second word was ‘stability’ – then he went and injected [€1trn into banks]. That was hardly predictable, but as an asset manager you have to adjust to policy, and to changes in political decisions.
“Before key decisions it is probably good to hold more in cash, which could of course be proved wrong. But if you respond very quickly in bullish cases, for example, using futures you can be 100% long again in portfolios in just a few minutes, whereas if things worsen, it is good to be partly in cash.