The Asian arowana is considered one of the most expensive fish in the world. Also known as dragonfish, it is believed to bring good luck and prosperity.
Value
Fueled by the frenzy in international trade and fish collection, the obsession with this fish nearly cost it its extinction from the wild. In addition, its declining habitat due to environmental degradation caused its population to dwindle too.
This in turn transformed the fish into an extremely valuable commodity. Consequently government-led efforts in regulation and captive breeding have cooled the market considerably.
Regime Change
Until recently, growth stocks in US public markets, led by the FAANGs, seemed indomitable despite their lofty valuations, leaving value investors anxiously waiting for the market to become more rational.
Fast forward to today where interest rates and inflation are on the rise, leading to the much-anticipated value-growth inversion. Exacerbated by the Russia-Ukraine conflict and COVID-induced supply chain disruptions, the global economy is now grappling with sluggish growth and mounting inflationary pressures.
In the short to medium term, the threat of recession and possibly stagflation cannot be dismissed.
Portfolio Strategy Challenges
In the long-term, tightening monetary policies, increasing geopolitical tensions, deglobalisation, inflation and climate change are some of the structural forces expected to impact the investment environment.
Some of these seismic forces are already on the horizon, although the implications are yet to fully manifest.
What are the implications for investors’ portfolio of the future?
- Is there still a role for a traditional 60/40 portfolio?
- Are public markets losing their efficacy?
- How can bonds and credit be effectively deployed in a rising rate environment?
- Should there be added emphasis for alternatives and private market exposures?
- Will climate change cause significant market repricing?
- How do you manage ESG integration and portfolio implications of the energy transition?
To achieve long-term objectives, the portfolio of the next decade may require incorporating an eclectic range of strategies and innovative approaches beyond the norms of traditional asset class buckets.
We look forward to discussing these challenges at the annual Global Investment Strategy Forum for sovereign, pension, insurance and endowment funds.
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