< The 2014 All-Europe Research Team

Abhinandan Deb & team
Bank of America Merrill Lynch
First-place appearances: 1

Total appearances: 12

Team debut: 1994

Bank of America Merrill Lynch advances to No. 3 after three years at runner-up. London-based Abhinandan Deb has led the team of six since last year. The low-volatility environment will continue into this year, Deb says, although “the end is in sight.” Turbulence will increase only after the extraordinary measures undertaken by central banks around the world — including the European Central Bank and U.S. Federal Reserve — to add stimulus to bolster their economies are eventually removed. Moreover, the effects of that winding down “take time to really seep through and lead to higher market volatility,” he notes. “We estimate it takes a year to two years for that to really happen.” Even so, the researchers predict that the Chicago Board Options Exchange Market Volatility Index will experience abrupt, sharp rises during the year and advises treating those peaks as opportunities. “In much the same way that people tend to buy equity dips as a nice entry point to go long equity,” Deb explains, “we’ve been recommending our clients try and sell volatility spikes.” His crew also favors relative-value trades. For example, with volatility in Europe likely to be supported relative to volatility in such other regions as the U.S., the strategists suggest buying volatility in Europe while selling it in the U.S.