Investment Strategy Forum 2023

King of the Jungle?

The lion has long been considered the ‘king of the jungle’, commanding respect and admiration from the animal kingdom.

However the debate over whether the tiger or lion is deemed the rightful king of the jungle has been a topic of discussion for many years. While both animals are impressive, it is difficult to determine a clear winner, with some experts arguing that the tiger is a worthy contender for the crown.

As members of the big cat species, tigers are generally larger in size, and known for their powerful build and hunting abilities. They are also highly agile and can swim, giving them a distinct advantage over lions.

In an incident at Turkey’s Ankara Zoo in 2010, a Bengal tiger killed a lion via a gap in the adjacent fence, where it viciously severed the lion’s jugular vein in a single stroke.

Should the Lion King abdicate?

Strategy | Defining Competitiveness

The fundamental measure of success of an investor is performance, aligned to an objective determined by the stakeholder(s).

For some, it is a straight-forward number (or percentage). In this instance, the tiger, a symbol of brute force, aggression and agility, can be a benchmark.

However for others constrained by layers of sub-objectives, some of which may be complex or even contradictory (eg YFYS performance test), the lion offers a source of inspiration.

(1) Organisation

Lions are known for their teamwork and social organisation, which allows them to take down larger prey than they could on their own. This gives them an edge over tigers. which are more reserved and operate as solitary hunters.

One-on-one, a tiger would certainly best a lion. But in the wild, the lion pride could more than hold their own against the solitary tiger.

(2) Adaptability & Courage

Tigers are usually found in the jungles, where they are the only predators found in their habitat. On the contrary, lions have to compete for food with hyenas, leopards, cheetahs etc in the open plains and savannah.

While tigers often stay hidden, lions lie down in open, in front of their competitors and prey.

As such, they are constantly on alert, and have to compete and fight for their territory. Despite having a size advantage, lions still have to fret about hyenas, which mostly prey on their cubs.

(3) Leadership & Social Structure

Operating within a pride of lions ensures that the group work together for food and survival in the wild. Despite being social animals, there are clear lines of authority and decision-making, with life-and-death consequences.

The alpha male takes on the defensive role, offering security for the pride, while the females hunt for preys. These complementary roles ensure the long-term continuity of the lion pride.

A well-designed organisational construct with appropriate governance is a good start, but implementing decisions during market uncertainty and volatility remains a challenge.

Competing Priorities | Decision-Making Under Uncertainty

The impending recession, inflation volatility and the inefficacy of the stock/bond correlation have caused investors to ponder about the re-configuration of their portfolios.

The Future Fund, Australia’s sovereign fund, recently published a position paper on ‘The Death of the Traditional Portfolio Construction’, signalling the new investment regime.

With competing priorities, CIOs and strategists need to consider how to allocate the limited resources to optimise investment outcomes.

Decision-making trade-offs include:

• Hard vs soft landing: Death of 60/40? Need for dynamic asset allocation?
• Redefining defensiveness: Bonds vs risk mitigation and diversifying strategies
• Implications for rising rates and bond yields: Time for more duration?
• Public vs private markets exposures: Valuations and illiquidity
• Decarbonisation and energy transition within an ESG framework
• Emerging markets, geopolitical risks and currency management

 

At the 11^th annual Investment Strategy Forum, we will address these critical issues in the context of how institutions invest for the long term.

(PS: We acknowledge the assistance of ChatGPT in the production of this synopsis)

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