Ex-CIA Acting Director and economist, Morell worked with six US Presidents. He explains the current geopolitical inflection point that will affect the world economy for a very long time.
The world is getting very interesting. Two strong forces - the US economy accelerating vs tariffs getting bigger - are creating a tug of war that means you need to have a bet each way.
In the cyber world today, we are somewhere around World War I. There are more than 30 nations with effective cyber forces. Practitioners need to understand the threat cyber weapons pose to markets and investments.
The People's Republic of China (PRC) invests heavily in high technology research. While the world will certainly benefit from the PRC's technological ambition, it also has challenging implications.
Machine learning algorithms are no match for the human brain when it comes to deciding how investment portfolios should be constructed.
Investors like to have their cake and eat it - i.e., they like investment returns (the higher the better) but dislike volatility (particularly negative returns). It is possible to engineer investment returns that meet those requirements.
A disciplined, scenarios-based approach to determining your views on the outlook for markets and the asset allocation implications can help future-proof portfolios. This hypothetical Investment Committee meeting considers the asset allocation implications of three scenarios.
The Australian (and global economy) is facing decades of significant technological change that will reshape how we work, where we work, and how we relate to each other economically and politically.
Investors should treat foreign currency as an asset class in its own right, considering both short- and long-term currency risks, as well as where the best return opportunities lie.
Unconstrained strategies can be supportive in both maximising portfolio returns and reducing risk but a clear philosophy and framework for apportioning risk in unconstrained portfolios is key.
The future is, by definition, uncertain, as are financial markets. To prosper in such an environment, we need to be emotionally agile in order to align our values and actions and, in turn, help investors achieve their financial goals.
Investors need to entirely rethink their processes, assumptions and research approach, to focus on the cultures of consumers in different markets. Only by thinking like new brands themselves, can investors identify and invest in the next powerful emerging trend.
The familiar phrase “Past performance is not indicative of future performance” is so common we almost ignore it, but it goes to the heart of how to view and manage risk and return to future-proof portfolios.
Investors should learn the lessons of history. Looking beyond near-term valuation multiples can help identify the next great winners and also help avoid the losers. Without growth investing, a portfolio is only focusing on only one side of the equation.
The decision to use active, passive, or both types of investments in portfolios is too often framed as an either-or debate. Both have the potential to help future-proof portfolios.
Future proofing portfolios is difficult, due to today’s demanding valuations and because the future is intrinsically unknowable. There are no set-and-forget strategies in a world of ever-changing prices.
Not all factor investing strategies are created equal. Investors embracing factor investing need to understand some core principles to create a future-proof portfolio.
A robust approach to asset allocation focusing on factors that do have predictive power – valuations and trend – can create a portfolio that is robust to changing markets.
The investment opportunity in EM is greater than just the companies domiciled there. In essence, investing in global growth should not simply be defined or determined by where a company receives its mail.
The impact investment market is growing. There is growing evidence that investing for return while generating a positive impact is a holistic way to create portfolios that are fit for the future.
Businesses adapting successfully to disruption exist across all industries and can be identified irrespective of prevailing market conditions. Finding those with improving earnings outlooks can deliver a future proofed portfolio.
Many of Australia's small companies are potential future leaders. A sharp focus on corporate governance can help identify those high quality, sustainable businesses that can last the distance.
To improve the accuracy of intended portfolio risk, investors should consider using a style neutral global equities fund to offset the likelihood they’re already invested in heavily style-biased portfolios.
Infrastructure as an asset class has helped investors meet future needs through four very different recessionary periods, reinforcing the need for allocations to the asset class.
Investment portfolio construction is, by definition, an exercise in long-term thinking. Given the uncertainties and competing priorities, are future-proof portfolios achievable? Practitioners share their views.
To future proof portfolios, you need human skill and judgment to distinguish between the purely random and real investment insights. This is the power of combining machines and humans.
An aging population, maturing superannuation system and government policy are dramatically increasing the need for effective solutions for the retiree population.
Due to biases in investing, Sharpe ratios of investor portfolios are often not as high as investors expect. How low can a random walk of a Sharpe ratio wander through the natural realisation of risk?
Research shows that owner-manager businesses reward their long-term (non-family) investors because they instill a stability, a culture, and a focus that is geared towards the long term.
AI-based investment solutions will change the landscape much faster than expected - and the importance of making good human decisions will be amplified.
Given the key defensive attributes of Australian private debt, at this late cycle phase of the market, it should be included in all portfolios that are able to invest in illliquid assets.
It is vital to think about both the risk and opportunities that sustainable investing provides and define a framework that matches your investment beliefs.
A disciplined, scenarios-based approach to determining your views on the outlook for markets and then the asset allocation implications can help future-proof portfolios.
Future-proofing isn’t about guaranteeing an outcome. No strategy can do that. It's about implementing strategies today that increase the likelihood that multiple objectives, often with different time horizons, can be all achieved.
Differences in regulation, politics, and transparency between Asian countries are all factors that cannot be captured by passive investing but which represent opportunities for active investors.
A fundamentally driven and benchmark unaware exposure to smaller companies within the emerging markets sector, this fund represents a unique way for investors to access emerging markets.
With US unemployment running at just 3.8% (equal lowest rate since 1969), the Fed will have to hike rates four times this year, with the risk that bond yields go not just to 3.5% but somewhere well north.
Over-the-top streaming will become the dominant form of media consumption, and Netflix will be the dominant global provider. Near-term valuation multiples may ultimately prove cheap.
Genomic medicine will radically change how diseases are diagnosed and treated. Healthcare valuations do not currently reflect the long-term opportunities in the sector.
Against the backdrop of legislated increases in financial adviser education, standards and ethics, finology must be seen as central to the curriculum of what financial advisers learn and how they practice, for professionalism to be complete.
Too much of our communication with end investors is either irrelevant, unintelligible to the average investor - or worse still, both.
While robo-advisors have been the big buzz as replacement humans, they’re not (and data proves it). Technology alone is not enough (otherwise everyone with a FitBit on their wrist would be healthy).
Behavioural biases - substitution, aggregation, and feedback risks, overconfidence, and limited attention and availability bias - distort money managers' perceptions and lead them to take risks they don’t see.
Trust – the belief that those to whom we are vulnerable are both willing and able to act in our interests – is the no.1 factor in the decision to select and retain an asset manager.
The Chinese authorities recognise the potential of blockchain technology and are outpacing the US, in the race to develop an "official" cryptocurrency. If the Chinese experiment succeeds, we may witness the start of a new epoch in monetary policy.
For Australian investors, are international markets still attractive sources of growth? Or is the Australian equity market more attractive? Do Australian sovereign bonds remain an anchor portfolio allocation for well diversified portfolios?
China’s Belt and Road initiative is expected to reshape the global economic landscape. However, the plan is poorly understood. It may generate political "returns" but opportunities for investors will be limited.
In 2017, the global economy experienced synchronised acceleration for the first time in a decade. The regime shift now underway will challenge portfolio construction designed for the previous regime.
Investors should focus more than ever on uncovering sources of idiosyncratic alpha, rather than relying on momentum or passive beta.
The global economy is approaching peak growth and investors should prepare for increasing left tail risks. This may be an opportune time to increase allocation to bonds as an insurance policy.
Structural change and the resulting earnings growth will always outrun interest rates in the long run, so as change continues to accelerate, investors need growth equities in their portfolio.
Data from the larger economies generally support the scenario of synchronised global expansion. The biggest risk to portfolios is strong growth and investors need to position themselves in anticipation of rising rates.
Whether an investor's investment horizon is three to five years, 10 years, or even 30 years, they would benefit from taking a generational perspective to enhance returns.
Will global synchronised growth drive earnings growth to a higher gear that warrants current elevated valuations? And should the early effects of technological changes influence investment choices now?
Bond yields may rise by up to 90bps a lot faster than the Fed is suggesting. It's time to consider what happens to your portfolio if bond yields change gears.
Technological change is advancing with unprecedented speed and scale. The early effects of these technological changes on growth, labour, policy and trade should influence investment choices now.
Are we in for a global inflation shock leading to significantly higher bond yields and a recalibration of relative valuations? Are we close to a one-in-a-generation change in the world's monetary order? Should we be switching gear with portfolios?
Every generation or so, things (in the economics world) break. Indeed, the history of the world's international monetary order is a history of change, occurring on average every 40 years. This current system is, therefore, long in the tooth.
Infrastructure assets have large environmental footprints. Incorporating ESG factors into the infrastructure investment process can improve risk-adjusted returns.
Technological revolutions often spawn financial booms and busts - but the value proposition of blockchain is profound, and the technology has given rise to cryptoassets. Practitioners will increasingly be required to understand them.