Alternatives investing: pursuit of uncorrelated investments with attractive risk-return characteristics

Gareth Abley, Head of Alternatives and Listed Sector Portfolios, MLC

Our job is to find attractive, uncorrelated alternatives for clients. We have learned that as well as maintaining this clarity of purpose, it is also important to be flexible. In the last few years, we have found attractive strategies across more niche, esoteric opportunities that we think will be much less correlated than more conventional strategies. These strategies are difficult to find, require a lot of research, and are often not particularly scalable, but worth pursuing in our view.

Inflation outlook: Assessing risks of inflation to long-term portfolios

Joe Kalish, Chief Global Macro Strategist, Ned Davis Research (NDR)

With signs of inflation emerging, fears are rising that we might be headed for a sustained bout of inflation. This is causing long-term capital allocators to reassess inflation risk in their portfolios and rethink their asset allocation.

Joe discusses his perspectives on inflation expectations, the key indicators he is tracking in monitoring inflation trends and shares his views on asset allocation under this uncertain outlook, in this exclusive interview with GII.

Spearheading the investment team to help clients achieve objectives through a challenging and changing environment

Aongus O’Gorman, Head of Investments, Willis Towers Watson (Australia)

Our leadership restructure will see us put more time into both our clients and our business, which we believe will drive our future success. To begin I have embarked on a listening tour, talking to colleagues and clients to understand how they are feeling, what they are thinking about at present and the future, and testing our current approach. This is a challenging time for our industry, and I want to ensure that we are positioned to deliver high quality services that help our clients achieve their objectives.

Expanding asset allocation into illiquid markets

Zoe McHugh, Portfolio Manager, QIC

Equities have benefited from historically low discount rates over the past decade, and we are mindful that the excess returns we have all experienced in the past few years will not continue into perpetuity. For that reason, we are continuing to expand our asset allocation into more illiquid markets, where QIC has had investment expertise for many years.

The changing asset mix and the importance of a differentiated offering in an evolving operating environment

Geraldine Barlow, Independent (non-executive) Investment Committee Member, Future Super & Centric Wealth

The focus on lowest cost outcomes in superannuation may not always produce the optimal outcome for beneficiaries. Further improvement is required from all sides of the industry to ensure the Your Future, Your Super regulations truly align to delivering best outcomes for members. From an investment perspective, the asset allocation mix for many asset owners across the globe will likely see a continued increase in allocations to private markets. A trend that is only likely to increase given the search for yield, and the attractive capital market features of these investments relative to public markets.

Perspectives on Your Future Your Super legislation from a superannuation fund leader

Kate Farrar, Chief Executive Officer, LGIAsuper

The asymmetric payoff of the legislative design of Your Future Your Super will drive superannuation funds to take less risk against their Strategic Asset Allocation decisions. This will likely push funds towards more passive investing and more fee-efficient and low tracking-error positions, which may cut out some really high-performing sources of returns for members, which they have been able to access over the past decade.

Future proofing culture and investment capability to thrive in a fast changing world

Lisa Gray, Chief Executive Officer, Victorian Funds Management Corporation (VFMC)

At this point we are reconsidering the role that traditional defensive assets should play in the portfolio, as well as how best to meet clients’ long-term objectives in a reinforced lower for longer macroeconomic outlook. We still believe that a long-term investment horizon provides material advantages in generating better investment outcomes, but we recognise that historical relationships may change in particular environments and we need to have portfolio flexibility to enable us to adapt to different scenarios.

Impact on the asset allocation mix from pursuing a reduction in portfolio carbon intensity

Deb Barnes, Managing Director, Capital Markets Risk, OMERS (Toronto, Canada)

Climate change is one of the most pressing issues of our time and represents both significant risk and opportunities. Across the organisation, OMERS is finding opportunities to invest in, and partner with well-run organisations who share our sustainable and environmentally responsible mindset. We have also recently announced a commitment to reduce the carbon intensity within our portfolios by 20%, by 2025. An ambitious target which needs to be managed in a measured and thoughtful manner to ensure we continue to deliver on the pension promise.

Diversity pays: A great positive externality with the added bonus of higher returns

Alexandra McGuigan, Global Development Director, 100 Women in Finance; Chair, Global Investment Institute Virtual Roundtables

Alexandra is the host of GII’s virtual roundtables and the Global Development Director for 100 Women in Finance, responsible for achieving the company’s ‘Vision 30/40’, which aims to have women represent 30% of investment teams and executive leadership positions by 2040. GII is delighted to partner with Alexandra in helping to achieve this vision towards greater diversity and inclusion across our industry, which creates positive externalities and the added benefit of higher returns also.

Challenging existing paradigms in a fast changing world

Paul Newfield, Director of Sector Research, Frontier

Today, the speed and pace of change means we need to be deft, nimble and open to challenging existing paradigms. Secular themes are driving the agenda of Paul’s work from the top down, with a focus on climate aligned strategies, exploring new Asian strategies across asset classes, niche real estate strategies and specialised alternative strategies.

The challenges and rewards of AI: Is your organisation on board?

Dr Alex Antic, Strategic Data Science Expert; Chair, Virtual Roundtables, Global Investment Institute

It has become clear to most organisational leaders that data and analytics is integral to not only staying ahead of their competition, but to simply be in the game! However, establishing a successful, scalable and sustainable AI capability can be challenging.

Savvy organisations have realised that having a governance process and framework to support AI and intelligent automation - especially AI ethics - is mandatory, and not simply a check-box exercise. In this article, Dr Alex Antic discusses what organisations need to do to truly reap the benefits of AI in a responsible and scalable way.

The changing portfolio mix in a negative real yield world

Joe Kalish, Chief Global Macro Strategist, Ned Davis Research (NDR)

Given the negative real yields throughout the developed world, fixed income will not provide the kind of returns investors have experienced in recent years. Furthermore, bonds may not provide the same degree of hedging protection against negative equity outcomes.

Investors will likely need to reduce their allocations to fixed income and cash and consider having a greater exposure to a broader array of asset classes, including private credit, private equity, venture capital, housing, commodities, gold, and crypto.

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