Investment Strategy Forum 2020 [Postponed]
[i3] Investment Strategy Forum 2019

[i3] Investment Strategy Forum 2019

Investment Strategy Forum 2020 [Postponed]

Note: Due to the COVID-19 pandemic, this forum has been postponed. More details will be available later.

The Pivot

One of the most common images of a dolphin is that of it gracefully jumping out of the water. Unlike the ‘fish out of water’ idiom, this mammal is amphibiously at ease as it pivots in and out of the water.

What’s probably less certain is the reason for this action, with an ongoing debate among scientists.

Some studies attribute this movement to the need to save energy as there’s less friction in the air, or to get a better view of its distant prey. Other explanations propose that as a form of communication or simply playfulness. Yet others hypothesise that dolphins jump in order to clean themselves of parasites!

Peace and Patience

The US Federal Reserve Chairman’s comments in Q4 2018 triggered four tumultuous months of market sell-off in stock and bonds, with ‘peace’ returning only after the Fed signalled patience with future rate hikes and its quantitative tightening program.

Dubbed the ‘Fed pivot’, it clearly illustrates the undue influence of monetary policy over financial markets, and the outlook for equities, bonds and financial assets.

However, Fed-watchers remain divided as to whether this marks the end of rate hikes and hence future easing, or if this is simply a temporary pause, subject to inflation and growth objectives. Regardless of either scenario panning out, investors are now forced to reckon with the actions of the Fed and other central banks driving the valuation and performance of their assets.

Pandemics and Black Swans

In what some might define as black swan events, the spread of COVID-19 beyond China, coupled with the oil dispute between Saudi Arabia and Russia, have plunged global markets into unprecedented chaos and volatility.

In such a time as this, it will be interesting to evaluate how various protection and diversifying strategies are holding up – portfolio insurance, alternative risk premia, crisis risk offset, etc.

Unintended Consequences

In Australia, the prudential regulator recently issued a performance measurement metrics, dubbed ‘heat map’, assessing the performance and sustainability of superannuation funds. While its intentions are noble and some benefits are clearly present, it inevitably creates another constraint for portfolio management, which may not be market driven.

Adaptability

A dolphin swims by arching its back and flexing it vertically up and down to propel forward. This contrasts with a fish, which sways its body left and right in order to move forward.

In an era of continued distortion of markets, technological disruption and regulatory intervention, do we need to have a fundamental re-calibration of the portfolio moving forward? How can we overcome legacy systems, traditional models and conventional thinking to embrace the new forces at work?

In its 9th annual edition, the [i3] Investment Strategy Forum will challenge the CIO and portfolio strategist to ponder over some of these issues:

  • Does the fund have the governance capability to embrace complexity while incorporating flexibility in decision-making?
  • Do dynamic asset allocation (DAA) strategies work? Do we need to re-define diversifying strategies in the light of the market chaos of March 2020?
  • How integral are macroeconomic analysis and geopolitics, when the central tenet to portfolio construction is usually driven by fundamental valuations?
  • How do you manage your portfolio in a negative interest rate environment? Has the bonds vs equities correlation broken down?
  • If companies are going ‘private for longer’, how do investors access alpha through the private-to-public lifecycle?
  • As investors increasingly access the unlisted markets, how can they meaningfully integrate private assets to a portfolio of predominantly public assets? Can an integrated risk and liquidity budgeting system be implemented?
  • How do trustees prioritise the multiple ESG objectives such as climate change, modern slavery, shareholder engagement etc, as well as the plethora of SDG initiatives?