The Western-led global economic order has had a bad 2023. Surprisingly, the primary cause was not the emergence of an alternative order led by China, as some had anticipated.

At this year's FAAA Congress, we asked an expert panel about the implications of a VUCA investment climate for the construction of multi-asset, multi-manager portfolios and for investment conversations with clients.

Different ways of presenting an identical set of data lead to very different insights into a fund’s performance. Using an arithmetic graph is by far the easiest to understand - and it can also be the most deceptive.

This paper provides a penetrating view into some of the motivational dynamics in play for individual investors who select sustainability-related investments, and implications for financial intermediaries who manufacture and sell such products.

It is past time to revisit the widely prevailing "free lunch" view of government debt. With a few notable exceptions, those who championed the notion have not acknowledged the likelihood of a new reality.

In the wake of the most rapid and material rise in global interest rates for 50 years, we could be forgiven for scratching our heads at what has happened over 2023. Has monetary policy lost its mojo? Or has 2023 been a "head fake"?

This report summarises the key observations from ASIC's review of how issuers of investment products are meeting design and distribution obligations and areas for improvement.

This lecture argues that client behaviour profiling should be a critical first step of the financial advice process. It examines why ethical client profiling - leveraging off psychology, behavioural finance, ethics, and the financial advice process - is necessary to successfully deliver consistent positive client outcomes. NOTE: This lecture is available for purchase - go to https://portfolioconstructionforum.edu.au/on-the-hunt/

Hamas's barbaric massacre of Israelis on 7 October and Israel's subsequent military campaign in Gaza to eradicate the group, has introduced four geopolitical scenarios bearing on the global economy and markets.

When seeking exposure to the energy transition, investors typically think of wind and solar farms, and hydrogen and battery production. But the best risk/reward energy transition opportunities can be found elsewhere.

As finance ministers and central bankers convened in Marrakesh for the IMF and World Bank annual meetings in mid October, what surprised veteran analysts the most was the expected calamity that hasn't happened - an emerging-market debt crisis.

When just about every asset price trends upwards, and episodic falls in market prices are quickly reversed, risk management is unrewarded. But the world has changed and portfolio risk management is now critical.

Even in the highly unlikely event that the current geopolitical situation improves rapidly, a deep sense of uncertainty will remain, driven by five economic and financial factors.

As risks related to over-indebted governments, the Russia-Ukraine war and Brexit fuel instability in Europe, the opportunity set for private credit investors is growing.

The WallStreetBets phenomenon - and the sensational short squeeze of Gamestop in 2021 in particular - demonstrated the potentially dramatic influence of collective retail behaviour on financial markets.

Those calling for the cash rate to be raised to a more appropriate "real" level or to match the Fed Funds rate to avoid "imported inflation" should be duly ignored.

Could Japan become the world's next great growth story? Warren Buffett seems to think so and the IMF expects the Japanese economy to grow by 1.4% in 2023. But the Japanese economy could also be a ticking time bomb.

Focussing on what we know about the world we live in and figuring out what it might mean for investing is much less glamourous and newsworthy than the prediction game, but it's potentially more rewarding.

There is good reason to think that the economic orthodoxy of the past 50 years has one foot in the grave. The question is whether the mainstream economics profession has gotten the memo.

The fact that structural changes do exist and that historical data are often of limited relevance presents a major opportunity for investors seeking to outperform others.

The three biggest crashes in US stock markets occurred in October and there have been other significant October falls over the past 100 years. While common sense suggests the "October Effect" is nothing more than market folklore, should it be ignored?

Whether the dollar retains its global role will hinge on whether the US brings its soaring debts under control, avoids another unproductive debt-ceiling showdown, and gets its economic and political act together more generally.

Artificial intelligence will revolutionise our lives - but investors should beware the lofty multiples being assigned to AI-related stocks. We are in a replay of the dotcom bubble.

Owning or not owning 4% of the global equity market is not going to make or break any portfolio. As for being too big to ignore? It's nuts and you can clearly see it's nuts.

The distinction between free trade and protectionism not only misrepresents recent history, it also misconstrues today's policy transitions and the conditions needed for a healthy global economy.

August 1982 was a banner month. It saw the dawn of a new regime for investors – and for record labels – that was to run for 40 years. But in 2022, cash rates finally ended their 40-year decline. And the world turned for investors.

Now that the BRICS (Brazil, Russia, India, China, and South Africa) will accept new members, can the grouping pose a genuine challenge to the prevailing global-governance institutions?

We are living in the middle of a major societal shift towards not just the use of, but the reliance, dependence and advancement of our lives being built on technology that seeks to emulate us, mimic us and envelope us.

AI has been described as important a lever for detaching economic growth from population growth as the steam engine. Companies that don't use AI to remake their business simply don't have a place in today's portfolios.

Three gigantic, global, interconnected risks have the potential to upend the world as we know it. Investors who understand these will be better positioned to successfully navigate the uncertainty plaguing our world.

In the same way that Moneyball has swept every professional sport, data science is bringing greater transparency to portfolio managers' decision-making skill. To select managers capable of outperforming, behavioural analysis is crucial.

At a time when "you can do anything", there are meaningful implications and opportunities for portfolio rebalancing and investors still structurally underweight bonds need to put aside recency bias and "do something" - now.

Yield premium over comparable liquid markets, control, upfront economics and low historical volatility and default rates make private credit an asset class to consider for a core allocation in investors' portfolios.

As markets become narrow and expensive, core, growth and quality portfolios are converging. This presents risks for many portfolios but a great opportunity for valuation-focused investors.

Every day, every one of us is touched by infrastructure and, the longer we live, the more billions of us there are, and the more we need infrastructure. Demand for essential infrastructure offers opportunities for investors.

Global small caps may be rewarded by the markets going forward supported by faster expected earnings growth and compelling valuations relative to large cap equities.

Opinions about private markets are often not rooted in facts, due in part to the fact that data on private markets has been scarce. But data is available and it debunks some of the common misconceptions about private markets.

The unique characteristics of private debt make it ideal for any portfolio, fitting in either the defensive or growth component of a portfolio – or even both at the same time.

Brokers hire a great many analysts to write and publish detailed analysis on corporate earnings forecasts. It's right to focus on earnings, but the level of delivered growth is less important than the surprise in growth (positive or negative).

The transition a net zero emission economy offers risks and opportunities for investors. Infrastructure is a simple way to benefit from the transition to a net zero emission economy and represents a multi-decade growth opportunity.

Today, many of the leading companies servicing emerging market economies have superior earnings growth to developed market peers, with many trading even cheaper than at the height of the Covid market turmoil.

Investment-grade corporate bonds can improve portfolio risk-adjusted returns. A focus on the highest quality global corporate bonds will provide opportunities for investors to capture future income, as well as add a defensive anchor within portfolios.

The primary criticism directed at those who think about the future is that it's an act of futility. But thinking about how the future may unfold has proven to be a useful way to make decisions amidst radical uncertainty.

Private Equity pooled returns have been attractive while also less volatile than investing in a single fund or fund-of-funds. Enabling investors to "buy the private market" would complement portfolios just like in public markets.

Small Caps have underperformed large cap peers in recent times however cyclical factors today and a rebound in domestic risk sets up for the reemergence in Australian Smalls.

As professionals we need to stand with our clients and share our voice to ensure risk-aware approaches part of our investment landscape.

The Investing Roundtable explored key challenges and opportunities that practitioners should be thinking about when building quality multi-asset, multi-manager portfolios.

The young are better able to navigate VUCA owing to their natural growth and learning mindset. In an environment where investors can do anything, just not everything, we can all benefit from adopting a youth mindset.

Markets have undergone a regime shift - to prosper, we need to understand the factors that will be crucial to building multi-asset portfolios capable of delivering financial wellbeing in the years ahead.

This is Part One of our annual three-part Strategies Conference Investment Committee hypothetical. Our
independent consulting firm has provided a global economic outlook for the next three years, using a scenarios-based economic modelling philosophy.

Achieving equity like returns with much lower risk and equivalent liquidity is the holy grail that is now on offer from high yield.

Beyond a near-term sluggish outlook for global growth, practitioners should think about three key forces which will drive long-term market risks and opportunities.

Since central banks abandoned their ultra-loose monetary policies, currencies once again offer a source of investment returns, as well as portfolio diversification.

For the first two decades of their life, hedged funds produced outstanding returns on average. For the past 20 years, it's not been so good. In this Spotlight, we review the reasons why, and whether there are any hedge funds worthy of inclusion in portfolios.

Advice Engagement is a framework that helps advisers focus on understanding their clients' needs and improving their outcomes, by improving the likelihood that the client will accept and follow the advice.

While the US dollar's share of global foreign exchange reserves is in long-term decline, the currency's dominance will continue despite the rising risk of embedded inflation.

While a severe hurricane for the global economy looks less likely than it did a few months ago, we are still likely to encounter a tropical storm that could cause significant economic and financial damage.

As economies slow, fixed income will once again provide portfolio diversification, allowing practitioners to focus on capturing long-term trends such as climate change and artificial intelligence.

As we move into an era which is both more inflationary and more volatile, asset allocators will need to adapt in order to deliver returns. A dynamic and unconstrained approach to asset allocation will become essential.

Until the early 1950s, investing was an art. Then, along came the publication of work undertaken by Harry Markowitz (1952). Over a 20-year period, this played the primary role in moving investing from an art to a science.

The authors of this paper propose that it's not just confirmation bias, but the way it interacts with a specific set of fundamental beliefs that generates a surprisingly wide array of bias effects.

The bulk of the research on sustainable investing has concentrated on returns. These two papers look beyond that to whether investors are so committed to sustainability that they will continue to invest irrespective of returns or fees.

Protecting capital in down markets is the foundation for superior returns – and quality investing, with a long-term investment horizon, protects shareholder wealth on the downside, while capturing steady capital growth.

In recent decades, the world's wealth soared as low interest rates drove up asset prices. But the global balance sheet is rife with fragilities. How the world borrows, lends, and creates wealth may change fundamentally.

Gold has fascinated investors and analysts for decades. But it is a poor hedge against inflation over meaningful time horizons, and it is close to its highest real price in 800 years.

Industry funds don't use up to date valuations on their unlisted assets, and this is effectively cheating on their performance reporting? That's nuts and you can clearly see it's nuts.

Over the past 15 years, as behavioural sciences gained widespread recognition, economics has progressively acknowledged the significance of the biases that drive individuals and firms to behave irrationally.

Active management has consistently delivered outperformance in small companies as the opportunity set allows managers to demonstrate both stock selection and portfolio construction skill.

The G7 countries may have set out to deter China without escalating the new cold war, but the perception in Beijing suggests that they failed.

The most recent evolution in index investing has been a drift into the active world. Until recently, active passive investing has not been subject to much analysis. The two papers considered here begin to make some inroads.

We should never let rules of thumb override financial fundamentals, but there are times when fundamentals become quite hazy. Recent inflation data suggests that we are in such a period right now.

Throughout history, technological change has created both winners and losers. There is no reason why AI, like previous technologies, shouldn't produce more of the former than the latter.

Only buy High Yield Debt when it is super cheap? It's nuts and you can clearly see it's nuts.

Fragmentation and decoupling are becoming the new normal - US and China remain on a collision course, and a dangerous deepening of the ongoing "geopolitical depression" is all but inevitable.

Confidence in a sea of confusion is key to success. Using three tools of persuasion, we can create a sense of certainty even when who knows what is just around the corner.

Decision attribution analysis provides a crucial lens on equity manager skill, benefiting asset owners and fund buyers as they select and monitor managers.

Investors today have more knowledge than any prior generation, however there remains a chasm between knowing and doing. Acknowledging we are all biased, because we are all human, is the first step to better decisions.

ESG investment is coming under increasing criticism, some valid - but the real problem is the ill-defined use of the acronym itself and we will all be better off if we stop using it.

CRE Debt provides dependable returns, backed by real property first mortgages. On a risk-adjusted return basis, every balanced portfolio should include an allocation to CRE debt.

The energy transition represents the greatest economic opportunity since the industrial revolution. Reliably capturing the potential and delivering tangible environmental impact requires three core beliefs.

Unlisted assets provide access to a bigger opportunity set that reflects active management in its truest form, giving opportunity for investment managers to further diversify multi asset portfolios with rich investments across diverse industries.

A partial allocation of retirement savings to a contemporary lifetime income stream can help increase the certainty of delivering what the income that retiree clients want. And such an allocation can help clients preserve assets.

To earn justified trust from clients and deliver consistently good outcomes for them year after year requires globally recognised fiduciary standards of care.

To better develop the skills required to analyse corporates, we can start with individuals as case studies and scale from there. If analysts can't do that, it's unlikely they can address more complex situations.

...though not unconditionally. The nascent field of Neurofinance suggests that investors attuned to their emotions can make better decisions during critical market events.

Retirement strategies must adapt in line with markets and demographics trends and the additional risks that are relevant for investors in decumulation.

We can help retirees build and retain their sense of control by keeping on building trust and educating them, modelling possible outcomes and showing a planned approach – including providing a Plan B.

A critical part of any retirement plan is a spending plan (which is not the same as a budget). Ultimately, a good spending plan helps keep clients' investments on track.

In a wide-ranging speech last week, Janel Yellen reversed the terms of US engagement with China, prioritising national-security concerns over economic considerations.

Until the BRICS countries can find a credible alternative for their own savings, the greenback's dominance will not really be in doubt.

The basic principle of duration risk seems to have been lost on many bankers, fixed-income investors, and bank regulators. After being a non-factor for the last 15 years, the interest-rate sensitivity of deposits has returned to the fore.

This Research Roundtable focused on the Ruffer Total Return International (Australia) strategy, with senior practitioners deciding, after briefings, Q&A and debate, their individual rating for the strategy and whether to include it on a hypothetical APL and/or multi-manager portfolios. Afterwards, the meeting is truncated and published for on-demand viewing by all Forum members.

Speculation that the world is deglobalising misses the mark - global integration is evolving, not retreating, in the digital era. Our world has changed.

India is poised to become the world's most important country in the medium term. Yet the model that has driven India's growth now threatens to constrain it.

America, China, and Russia are collectively sleepwalking down a path of conflict escalation, carrying high-octane fuel that could be ignited all too easily. Just like 1914.

Established in 2009, Markets Summit is THE investment markets scene setter of the year, focusing on the key drivers and outlook for the markets. As usual, 2023 Faculty were each challenged to offer their best high conviction proposition in the context of the program theme - this year, "Every VUCA cloud has a silver lining!" Their high-conviction faculty propositions can be distilled into three key discussion threads, supporting the case that, for portfolios, every VUCA cloud has a silver lining! Watch the highlights video, read the key takeouts - and then delve into the high conviction presentations that most interest you.

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.

Investors need to leverage the experience of past decades while also humbly contemplating an uncertain outlook. Compared to any post-WWII period, this time really is different!

The pre-pandemic New Normal decade introduced investors to TINA - there is no alternative. With interest rates and bond yields having moved higher, it's time to say goodbye to TINA because bonds are back.

In these unsettled VUCA conditions, private debt can offer short duration with a focus on capital preservation, a silver lining for investors in the form of consistent, risk-adjusted returns and income.

Those constructing portfolios must understand the nuances of bond risk/return drivers and how bond market performance can be impacted by different macro scenarios. Opportunities abound.

The RBA is set to continue rate hikes that will bring on an earnings recession in 2023. Use Australian equity market weakness later in this year as the silver lining to position for an improved long-term outlook for Australian equities.

Global demand for greater computing power continues to escalate, presenting an exciting silver lining of possibilities and investment potential.

Inclusion of private equity 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.

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.

Although the consequential volatility casts a VUCA cloud over global REIT performance, the silver lining is that this is transitory, in part reflecting a number of the sector's key attributes.

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.

After a chaotic period, across most asset classes, silver linings are emerging. Global equity investors can capture these by identifying companies best placed to benefit from shifts in energy and technology.

Once the decision has been made to invest in global small caps, fundamentals return to the fore. Limited research coverage and inefficiencies in the market are the opportunity.

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 that are cheap with significant growth drivers.

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.

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.

Our diverse panel of experts debated which of the high conviction propositions they heard during Markets Summit 2023 they most strongly agreed with and why, including identifying "silver linings" (investment opportunities not yet fully priced into the market) and which they disagreed with most and why - and the portfolio construction implications of both.

There was plenty of food for thought and grist for the investment portfolio mill, coming out of the recent Markets Summit 2023 "Every VUCA cloud has a silver lining!".

The concept of "transitory inflation" is making a comeback. Looking ahead to the rest of the year and early 2024, three inflation scenarios stand out for me.

Many who attended this year's World Economic Forum in Davos were struck by the jubilant mood of the CEOs in attendance. It was hard to reconcile this optimism economic uncertainty caused by the war in Ukraine.

This lecture argues that a diversified portfolio of core fixed income securities is an essential component of an optimal multi-asset portfolio. What's your philosophy?

This lecture explores the concept of ethics, contemporary issues in financial services as they relate to ethics, and the relevancy and application of ethics in our everyday lives.

Value investing has proven successful over time but it requires discipline and a long-run horizon - and disagreement remains over whether the value premium will persist. What's your philosophy?

This Spotlight finds that High Yield Debt can be a very useful addition to most investors' portfolios, producing returns that are close to those of Equities, but with lower risk. Read the full report.

This Spotlight highlights that High Yield Debt can be a very useful addition to most investors' portfolios, producing returns that are close to those of Equities, but with lower risk. Read the abridged report.

Uncertainty and change are unavoidable realities of life. In the spirit of thinking differently and embracing uncertainty, I offer you this year's global developments to watch over the next five years.