Markets Summit 2023 - Program & Faculty
Markets Summit 2023 will help you better understand the key drivers of and outlook for the markets, and the opportunities and risks ahead on a three- to five-year view, to aid your search for return and to help you build better quality investor portfolios.
For the first time in decades, an inflationary gale is rattling financial markets. Many post-GFC tailwinds have gone into reverse, as we experience a regime shift from an era of globalisation, “rules-based” geopolitics, fiscal discipline, benign inflation, steady economic growth and ultra-loose monetary policy to one of localism, nationalism and war, fiscal largesse, soaring inflation, elevated recession risk and higher interest rates.
This once-in-a-career regime shift poses many challenges for portfolio construction practitioners. The high VUCA (volatility, uncertainty, complexity, ambiguity) market environment continues! Yet, opportunities abound for those able to identify the powerful forces reshaping the outlook for markets, and to reorientate their portfolios accordingly. Every VUCA cloud has a silver lining!
We’d welcome you joining us - at our live studio in Sydney, as part of a group at an off-site live site, or via live stream. Register now!
Graham Rich
Dean, Portfolio Construction Forum
QUICKLINKS
More info & to register Where; When; Aim; Most suited to; CE/CPD accreditation; Cost; Theme; Register now
A quick introduction
Established in 2009, Markets Summit is THE investment markets scene setter of the year. Designed and curated by our specialist, experienced and independent team, the program features a Faculty of 20+ leading investment thinkers - geopolitical specialists, economists, market/asset class experts, and investment strategists - from around the world. Each offers their best high conviction ideas on the drivers of and outlook for the markets (on a three- to five-year view) in the context of the theme below, to aid your search for return and to help you build better quality investor portfolios.
Theme: Every VUCA cloud has a silver lining!
Markets Summit 2023 will help you better understand the key drivers of and outlook for the markets, and the opportunities and risks ahead on a three- to five-year view, to aid your search for return and to help you build better quality investor portfolios.
For the first time in decades, an inflationary gale is rattling financial markets. Many post-GFC tailwinds have gone into reverse, as we experience a regime shift from an era of globalisation, “rules-based” geopolitics, fiscal discipline, benign inflation, steady economic growth and ultra-loose monetary policy to one of localism, nationalism and war, fiscal largesse, soaring inflation, elevated recession risk and higher interest rates.
This once-in-a-career regime shift poses many challenges for portfolio construction practitioners. The high VUCA (volatility, uncertainty, complexity, ambiguity) market environment has once again become prominent and influential! Yet, opportunities abound for those able to identify the powerful forces reshaping the outlook for markets, and to reorientate their portfolios accordingly. Every VUCA cloud has a silver lining!
For much of the past 40 years, investors experienced an Age of Megatrends. The 1980s brought a profound shift in financial markets, as monetary policymakers regained control over inflation and the end of the Cold War sparked hopes for increased global integration. In the following decades, globalisation and declining interest rates, alongside other secular forces including Portfolio Construction Forum’s 5 Megatrends, drove the outlook for asset prices, leading many investors to adopt a top-down, passive approach. Macro beta dominated bottom-up alpha. Central banks stood ready to backstop markets, and then implemented their unconventional policies to preserve financial stability.
However, the past three years have brought a sea-change in markets, as the disruptions of Covid-19 and the Russia-Ukraine War have re-awakened the scourge of persistent high inflation. With monetary policymakers once again committed to taming the prices of goods and services, their ability to stabilise markets is diminished. Meanwhile, geopolitical tensions are growing, as the strategic desires of authoritarian states rub more forcefully against those of liberal democracies. It’s now abundantly clear that the trends driving financial markets are Volatile, Uncertain, Complex, and Ambiguous - and that portfolio construction practitioners can no longer depend on the macroeconomic and geopolitical frameworks of recent decades.
The Age of Megatrends looks increasingly like an aberration, and there is a growing recognition and evidence of regime change and that we are once again living in a VUCA World. While that brings risks, it offers significant investment opportunities for those who adopt a VUCA Prime mindset -– a blend of Vision, Understanding, Clarity and Agility. In short, we have returned to an environment in which highly skilled active portfolio managers once again have a real opportunity to deliver alpha.
Further, practitioners with appropriate knowledge, skills and expertise – and, critically, a VUCA Prime mindset – are well placed to bring a whole brain approach to the portfolio construction cycle, and deliver multi-asset, multi-manager portfolios capable of meeting the long-term financial objectives of clients. Every VUCA cloud has a silver lining!
Prep
To maximise your learning, you are provided with prep - some videos and readings - aimed at refreshing your memory, boosting your knowledge, and getting you thinking about the issues to be addressed in the program. The preparation is assumed prior knowledge.
Read: Markets Summit 2023 - scene setter - by the Forum
Watch: Strategies Conference 2022 - Economic Scenarios and Asset Allocation update - by Tim Farrelly & Jonathan Ramsay
Read: There is more inflation complexity ahead - by Mohamed El-Erian
Read: Too soon for global optimism - by Kenneth Rogoff
Read: In defence of democratic capitalism - by Martin Wolf
Watch: Globalisation’s future ain’t what it used to be! - by Rana Foroohar
Watch: Markets Summit 2022 "The best offence is a great defence! key takeouts
Program at a glance
Wednesday 22 February 2023
AEDT 7.45am - Live stream starts
AEDT 8.10am - Pre-opening scene-setter
AEDT 8.30am - Critical Issues Forum
Every VUCA cloud has a silver lining!
For the first time in decades, an inflationary gale is rattling financial markets. Many post-GFC tailwinds have gone into reverse, as we experience a regime shift from an era of globalisation, “rules-based” geopolitics, fiscal discipline, benign inflation, steady economic growth and ultra-loose monetary policy to one of localism, nationalism and war, fiscal largesse, soaring inflation, elevated recession risk and higher interest rates. This once-in-a-career regime shift poses many challenges for portfolio construction practitioners. The high VUCA (volatility, uncertainty, complexity, ambiguity) market environment continues! Yet, opportunities abound for those able to identify the powerful forces reshaping the outlook for markets, and to reorientate their portfolios accordingly. Every VUCA cloud has a silver lining!
- Graham Rich, Dean, Portfolio Construction Forum
AEDT 8.35am - Critical Issues Forum
In every way, it is different this time Watch on-demand
Volatility? Yes. Uncertainty? Always. Complexity? Definitely. Ambiguity? No! There’s nothing ambiguous about the data. Inflation is slowing and we are close to the end of one of the most dramatic tightening cycles in history. Bond markets see central banks cutting rates in 2023. But even if rates do fall this year, the outlook for earnings and economic growth is weak, and both Europe and America likely face recession. Meanwhile, geopolitical tensions are ballooning, as autocracies more forcefully challenge the liberal world order established after the Second World War. As the clouds of Volatility, Uncertainty, Complexity and Ambiguity continue to swirl, the silver lining is that we are on the road back to normal monetary policy settings, from abnormal, and a return to more rational asset prices. But we must be patient. It will take time to expunge the excesses created by years of abnormal monetary policy and abnormal investor behaviour. Take shelter and have the Vision, Understanding, Clarity and Agility to exploit the gaps and spot silver linings in the VUCA clouds.
- Jonathan Pain, Author & Publisher, The Pain Report
AEDT 9.15am - Critical Issues Forum
This time really IS different Watch on-demand
Disinflation has begun in the United States and will soon in Europe, but cutting inflation from 4% to 2% will be tougher than from 6% to 4%. Even after the near-term battle has been won, the probability of structurally higher inflation across developed economies has increased, and monetary policy responses are likely to diverge meaningfully. To navigate this transition’s VUCA, investors will need to leverage the experience of past decades while also humbly contemplating an uncertain outlook. The winning investment playbook will no longer depend solely on macro factors and asset allocation but will also require fundamentally driven security selection to drive returns. Compared to any post-WWII period, this time really is different!
- Ronald Temple, CFA, Chief Market Strategist, Lazard Asset Management
AEDT 10.05am - Morning Break
AEDT 10.30am - Critical Issues Forum
It’s time to say goodbye to TINA Watch on-demand
The pre-pandemic New Normal decade of subpar-but-stable economic growth, below-target inflation, subdued volatility, and juicy asset returns has faded in the rear view mirror. That environment introduced investors to TINA - there is no alternative. They were forced out the risk spectrum from government bonds, to corporate credit, to equities and beyond, while bonds’ diversifying characteristics came into question But after facing difficulties on all fronts in 2022, investors should be rewarded with more opportunities ahead, even as the global economy confronts headwinds. With interest rates and bond yields having moved higher, every VUCA cloud has a silver lining! It’s time to say goodbye to TINA because bonds are back.
- Daniel Ivascyn, Group Chief Investment Officer, PIMCO
AEDT 11.10am - On the move
AEDT 11.20am - Special Interests Forum 1 - choice of concurrent sessions:
1. Private debt is your safe port in any storm Watch on-demand
Private debt will keep your portfolio on an even keel in turbulent times by adding the necessary ballast to provide the capital security that other assets cannot deliver. When peaceful trade and stable inflation are the norm, investors can use long duration debt and equity to provide adequate return without fearing their portfolios will capsize. Today, investors face the opposite scenario in which the Ukraine war, amongst other factors, is driving economic turbulence and high inflation. In these unsettled VUCA conditions, private debt can offer short duration with a focus on capital preservation. Its characteristics – including floating rates, strong governance, and low correlation with public markets – all work to ensure smooth sailing and a silver lining for investors in the form of consistent, risk-adjusted returns and income.
- Andrew Lockhart, Managing Partner, Metrics Credit Partners, represented in Australia by Pinnacle Investment Management
2. Decade-high yields alone don’t make bonds attractive Watch on-demand
Higher bond yields don’t automatically translate to higher returns because yield is not free money, it is compensation for risk. Therefore, those constructing portfolios must understand the nuances of bond risk/return drivers and how bond market performance can be impacted by different macro scenarios. Forecasting the macro outlook is difficult at the best of times and perhaps near impossible in the current high VUCA environment. The silver lining is that fixed income offers lesser-known return sources that are independent of the macro outlook, which means opportunities abound for those willing to look beyond the conventional, dig into some of the complexity, and reorientate their portfolios accordingly.
- Gopi Karunakaran, Co-Chief Investment Officer, Ardea Investment Management, represented in Australia by Fidante Partners
3. The RBA is crashing the party Watch on-demand
The RBA’s hawkish pivot signals a turning point for Australian equities. Backed into a corner with a high inflation, the RBA is set to continue rate hikes that will bring on an earnings recession in 2023. Although the ASX failed to make new highs in 2023, the market is at a high that makes it vulnerable to more downside. While mortgage rates are rising and the retail pain is only just beginning, Australian CPI – which had been lagging the rest of the world – is still rising while inflation in other economies is moderating. Practitioners should be patient and use equity market weakness later in this year as the silver lining to position for an improved long-term outlook for Australian equities.
- William Curtayne, CFA, Portfolio Manager, Milford
AEDT 12.00pm - Lunch Break
AEDT 12.40pm - Critical Issues Forum
Every VUCA cloud has a silver lining! Structural trends Watch on-demand
This panel session features three investment experts, each offering and debating a high conviction thesis on a long-term, deep rooted structural change impacting markets over a decade or more:
- In an AI world, semiconductors are the new oil
While ChatGPT has brought AI into the mainstream, this fourth generation of computing started accelerating years before. Global demand for greater computing power continues to escalate, presenting an exciting silver lining of possibilities and investment potential, where gigantic volumes of Cloud-based real time data are generated and manipulated from virtually unlimited connectivity, from traffic lights to fridges to ChatGPT responses. The brewing VUCA sandstorm of semiconductor demand will create a handful of investment champions and shape global politics for years to come.
- Nick Griffin, Founding Partner & Chief Investment Officer, Munro Partners, represented in Australia by GSFM
- Private equity is no longer an alternative asset class
As more and more companies are choosing to remain private for longer, the Private Equity (PE) opportunity can no longer be ignored. In an increasingly VUCA world, PE remains a sustainable source of alpha, still able to access proprietary deals leveraging asymmetric information, at a time when public markets have become a technological and AI-driven arms race to rapidly process near perfect information availability. The opportunity cost of not being invested in PE is too high. Its inclusion as an alternative asset in portfolios is an out-of-date approach that does not consider secular trends in companies staying private and the unfolding democratisation of PE.
- David Chan, CFA, CFA, Portfolio Manager - Private Equity, MLC Asset Management
- A return to progress is a silver lining of Covid-19
In the Great Panic of early 2020, normal life was replaced by a new society, managed by a medical/ruling elite that promised but failed to deliver virus mitigation. In Australia, rules that were sold to us as “for the greater good” in fact delivered horrific losses that will cripple us for a generation. Yet the upheavals of the past three years were powered by tensions that pre-date Covid-19, including declining living standards and rising pessimism. As economies continue to recover from the catastrophe of Covid-19 lockdowns, we must re-embrace the pursuit of progress, an idea that is central to science, freedom, and a thriving society.
- Gigi Foster, PhD, Professor of Economics, University of New South Wales
AEDT 2.10pm - On the move
AEDT 2.20pm - Special Interests Forum 2 - choice of concurrent sessions:
1. G-REITs are the liquid real estate value play Watch on-demand
Investing in global REITs enables investors to gain exposure to real estate in a liquid form. Liquidity plays a key role in portfolios and investors value this more in times of market stress. This was once again highlighted over the course of 2022 during the rapid change in inflation and monetary policy settings. Given the recent market volatility impacting the listed markets, we are now witnessing dislocation between public and private market real estate valuations. Although the consequential volatility casts a VUCA cloud over REIT performance, the silver lining is that this is transitory, in part reflecting a number of the sector’s key attributes including transparency and liquidity. Over the medium to long term, the performance of select well managed REITs is driven by the performance of underlying real estate, and dispersion between public and private market real estate values converge.
- Andrew Parsons, Chief Investment Officer, Resolution Capital, represented in Australia by Pinnacle Investment Management
2. Portfolios need to embrace secular trends Watch on-demand
With macro uncertainty from slower growth prospects, elevated inflation, and still hawkish central banks, investors need to look beyond such VUCA noise and the immediately available information, to align investments with global megatrends. They are changing the investment landscape and shifting the direction of investment capital. It’s vital to keep a long-term orientation in investment philosophy, with a focus on quality growth companies that are well positioned to benefit from secular themes of changing demographics, tapping into the growing need of healthcare, leisure, financial planning, beauty, tourism for aging, and living-longer societies. Innovation is the silver lining, fuelling the next stage of corporate growth through increased automation driving productivity efficiency, leveraging on the reshoring trends and digitalisation, and connecting consumers to benefit from the rise of the middle-class’ purchasing power, particularly in emerging markets. Sustainability is at the core of future societies. By channelling investments in companies with sustainable practices, heightened by environmental and social conscience, investors can seize opportunities in transitioning economies.
- Ecaterina Bigos, CIO Core Investments Asia ex Japan, AXA Investment Managers
3. Secular growth opportunities can be identified in a VUCA World Watch on-demand
After a chaotic period for economies, healthcare and markets, across most asset classes, silver linings are emerging. In Europe, the shuttering of Russian energy supplies is motivating governments and companies to accelerate the transition to alternative energy sources. Combined with policy initiatives and a significant injection of capital, energy systems are moving towards a new sustainable paradigm. Meanwhile, investments in data and computing speed are taking artificial intelligence to a remarkable level, opening significant productivity opportunities. Global equity investors can capture these silver linings by identifying the companies best placed to benefit from shifts in energy and technology.
- Nikki Thomas, CFA, Portfolio Manager, Magellan Financial Group
AEDT 3.00pm - Afternoon Break
AEDT 3.20pm - Special Interests Forum 3 - choice of concurrent sessions:
1. For global smalls, the macro doesn’t matter - cash flow is King Watch on-demand
While macroeconomic factors are an important driver for asset allocators, once the decision has been made to invest in global small caps, fundamentals return to the fore. Cash flow generation, quality balance sheets and valuations are long-term drivers of outperformance in this asset sub-class. Macroeconomic VUCA concerns become an opportunity creator in the vast small caps sector. The limited research coverage and the inefficiencies in this market are the opportunity that creates a strong hand for prepared fundamental investors.
- Marcus Burns, Portfolio Manager, Spheria Asset Management, represented in Australia by Pinnacle Investment Management
2. We live in a multi-polar world and ought to invest like it Watch on-demand
The US has dominated global equity returns for approximately 15 years. This is a cycle – it is all cycles! And that cycle is over. It turns out that Francis Fukuyama’s “End of History” wasn’t quite accurate. We live in a multipolar world. Amid complexity and ambiguity, investors will have to work harder to make money than just owning US beta. The silver lining is that there are large equity markets and sectors including China and Japan that are cheap, with significant growth drivers.
- Julian McCormack, Analyst, Platinum Asset Management
3. The tide is set to rise for emerging markets equities Watch on-demand
After a lost decade, cyclical and structural headwinds are abating for emerging market equities, while profound secular changes are becoming tailwinds. But the path ahead will look very different to the past, as emerging markets undergo rapid social and structural transformation, accelerated by the Covid-19 pandemic. In times of complexity and ambiguity, investors should avoid the risk of betting on yesterday’s winners. The real opportunity lies in taking a fresh approach to identifying, understanding and investing in upcoming trends that will shape emerging markets, some of which will even influence the developed world.
- Tassos Stassopoulos, Managing Partner & Chief Investment Officer, Trinetra Investment Management
AEDT 4.00pm - On the move
AEDT 4.10pm - Critical Issues Forum
Sustainable investing (done right) is capitalism at its best Watch on-demand
As practiced, there are significant challenges to sustainable investing. These include multiple definitions and confused terms, overreliance on checklists, misleading marketing campaigns, and a lack of rigour and accountability. Yet these criticisms are by no means evidence that sustainable investing and environment, social and governance (ESG) are failed concepts. ESG analysis advances and drives sustainable investing by helping investment practitioners develop a clearer view of a company’s true market value, consistent with their fiduciary duty. In a world that needs transformational change, ESG is crucial to building a financial system in which capital allocators integrate climate and justice in their decisions, across all asset classes. For practitioners who proactively and consciously embrace this responsibility, such capitalism will deliver the unmistakable silver lining of a performance advantage.
- David Blood, Founding Partner & Senior Partner, Generation Investment Management, represented in Australia by Colonial First State
AEDT 4.50pm - Critical Issues Forum
Every VUCA cloud has a silver lining! Key takeouts Watch on-demand
Our diverse panel of experts debates which of the high conviction propositions they heard during Markets Summit 2022 they most strongly agree with and why, including identifying “silver linings” (i.e. investment opportunities not yet fully priced into the market) and which they disagreed with most and why - and the portfolio construction implications of both.
- Jacob Mitchell, Founder, Chief Investment Officer & Lead Portfolio Manager, Antipodes Partners, represented in Australia by Pinnacle Investment Management
- Katie Hudson, Director & Portfolio Manager, Yarra Capital Management
- Richard Quin, Chief Investment Officer & Principal, Bentham Asset Management
- Daniela Jaramillo, Head of Sustainable Investing Australia, Fidelity International
- Tim Farrelly, Principal, farrelly’s Investment Strategy
AEDT 5.45pm - Markets Summit 2023 ends
AEDT 5.45pm - Markets Summit 2023 Networking Drinks (live studio)
Join us for a relaxed catch up with your fellow delegates (ending 6.45pm).