Flight to Quality – Investments Thesis

Why ‘FLIGHT TO QUALITY’

High level uncertainty

The world is going through a crisis that has raised levels of uncertainty in relation to its economic developments, strongly affecting asset prices around the globe. In times of uncertainty, the world has traditionally sought to protect investments in US government debt securities, which act as a safe haven amid uncertainty. It is not possible to know what will happen to the stock market. Companies may suffer in the face of economic challenges and gold may experience unwanted volatility. However, the world generally relies on the ability to pay of the largest economy in the world and therefore seeks protection in US bonds.

Dollarized investment

As in other crises, the dollar appreciated against emerging currencies, reducing the global purchasing power of those who do not have a dollar reserve. Therefore, Flight to Quality is often seen as a way to protect its global purchasing power.

Access

This is the first step towards global access. One way to look for investments seen as less risky in turbulent times in the market.