Portfolio managers and investment advisers still too often follow their own values, rather than their clients’, when making investment decisions. In the 2020s, values will move from the periphery to the focal point for successful investments.
The disconnect between financial markets and the real economy is becoming more pronounced, as investors focus on the attenuation of some short-term tail risks, and on central banks' return to monetary-policy easing.
Focusing on financially material ESG data and systematically including them into investment analysis facilitates 20/20 vision of a company’s risk-return profile.
This hypothetical Investment Committee considers three relevant, forward-looking economic and market scenarios which have a reasonable probability of occurring during the next two to three years.
To achieve a satisfactory return from equities, you must identify high quality forecastable businesses, apply a strict valuation discipline and have the conviction to be different from the herd.
Future returns from infrastructure portfolios are less clear due to disruptive forces. Managing these risks requires an unrelenting focus on improving efficiency and customer service.
Sharpe proposed that active investing must be a losing pursuit in aggregate. This paper takes a critical look at that proposition, and whether it is worthwhile considering using active fund managers.
The significant valuation gap between listed and direct infrastructure markets presents an opportunity to arbitrage value from the two as the gap closes. Understanding the weight of this change into 2020 and beyond is key.
Limiting overlapping economic exposures more effectively creates concentrated yet diversified portfolios capable of meeting investors’ long-term objectives into the 2020s, while better managing risk.