The role of climate change scenarios in investment portfolios

For long-term investors like GIC, climate change is a key concern given its imminent impact on the value of physical assets and companies over time. Hence factoring this into both our top-down and bottom-up processes is vital to ensuring a resilient portfolio.

Portfolio for the future

Economic super cycles are far from a new topic. Perhaps the most famous examples are the technically inspired Elliott wave and the technologically grounded Kondratiev wave, named after Soviet economist Nikolai Kondratiev, who was executed for his evangelism of the topic.

The carbon price solution

The net-zero transition requires the rapid development at scale of new technologies, energy-efficient infrastructure, and carbon capture and storage.

Creating value through sustainability in private markets

Investors across the landscape of private and public markets are facing ratcheting pressure to allocate their capital in ways that create progress on environmental and social issues, in addition to delivering returns. In private equity, general partners (GPs) and limited partners (LPs) are increasingly being held to account by their respective stakeholders.

Decarbonizing long-term portfolios

Millions of people around the world are saving money to meet personal goals—funding a comfortable retirement, saving for someone’s education, or buying a home, to name a few.

Globalisation after the virus

The coronavirus pandemic has cast a dark shadow over global trade. In the short term, lockdowns across the world have caused an unprecedented collapse in cross-border commerce, a rational response, guided by public health considerations. But the fear is that these negative effects will persist long after the crisis has passed. This, though, shouldn’t be a foregone conclusion.

The carbon price solution

The net-zero transition requires the rapid development at scale of new technologies, energy-efficient infrastructure, and carbon capture and storage. A carbon price, together with the elimination of fossil-fuel subsidies, would give investors powerful incentives to finance these and other imperatives.

Why the SEC is right to make climate risk disclosure mandatory

With the increasing frequency and severity of extreme weather events comes a heightened focus on the risks of climate change. But in the absence of consistent financial reporting on them, investors and companies have had to hazard their own guess of the impact on markets and the economy.

Are we at the inflection point of climate investing?

The rise of environmental, social, and governance (ESG) investing is nothing short of extraordinary. A decade ago ESG was a mysterious acronym to many and it had to compete with an alphabet soup of terms such as Corporate Social Responsibility (CSR), Responsible Investing (RI), and Impact Investing (II). ESG has risen to the top, but though popular, the acronym has suffered from varied and somewhat confusing definitions.

Decarbonizing long-term portfolios

Climate change is altering the dynamics of investing by posing meaningful risk while also offering substantial new opportunities for growth and investment. Institutional investors of all types increasingly recognize climate change as the primary driver of the greatest shift in asset allocation over the past 50 years, and investors are thinking critically about how to address this megatrend in their portfolios.

Harnessing the potential of private assets

Institutional portfolios such as corporate pension plans are increasing allocations to illiquid private assets seeking better returns and diversification. However, as allocations increase, a portfolio’s liquidity structure changes, sometimes abruptly.

Embracing Uncertainty

The significant impact of Covid on the economic and financial markets landscape has brought into focus the importance of incorporating uncertainty into any investment process. The unusual, stop-start nature of activity has no historical precedent, meaning lessons from the past are unlikely to be very helpful.

Macro matters: Life after lockdown

This week marks the rather grim milestone of a year since the World Health Organisation declared the COVID-19 spread a global pandemic. But with vaccines being rolled out and lockdown easing, we might be glimpsing the light at the end of the tunnel. The big question remains: what will the world look like when lockdown is over?

Change how we invest

Should we be thinking about investment differently in 2021? Certainly, there appears to be cause for challenge of current thinking on inflation rates and the rise of China in the new world order.

Change how we work

2020 was by just about any measure, unprecedented. Market volatility, regulatory change and the need to make decisions quickly – but largely remotely – put more emphasis than ever on dynamic and effective decision-making in pension investment committees. It was a true test of robust governance.

Change how we think

The big macro changes that have taken place over the last year require a rethink and action from investment professionals.

The jump in US inflation is here. This is where it may head next

The highly-anticipated jump in U.S. inflation has arrived. While the sustainability of the increase remains open for debate, recent readings have surged and market-based indicators continue to show a surprisingly prolonged increase in inflation expectations.

The inflation conundrum

The prospect of a sharp pick-up in inflationary pressures isbeginning to concern investors. Our historical analysis shedslight on how stocks, bonds and other asset classes behaveduring periods when inflation takes hold.

Managing money in an MP3 World

Over the past year, the COVID-19 pandemic has accelerated the shift to a new paradigm for economies and markets, characterized by near-zero interest rates, coordinated monetary and fiscal policy (Monetary Policy 3/MP3), and heightened internal and external conflict.

The case for venture

In 2020, there are 4 very powerful and visible phenomena, the convergence of which is likely to bring tremendous change and disruption, much of which will be at the expense of incumbent business models and with significant investment implications.

Climate scenario analysis – a unique investment framework

Climate change is one of the defining issues of our age. Its physical manifestations are negatively affecting ecosystems, human health and economic infrastructure. The transition to a zero-carbon economy presents significant challenges, but also opportunities for investors.

Extracting growth alpha in emerging markets

Institutional allocations to emerging markets (EM) equities have increased steadily since the 1980s1, as the asset class has evolved from frontier investment to growth mainstay.

Alpha Decay

Using a novel sample of professional asset managers, we document positive incremental alpha on newly purchased stocks that decays over twelve months.

Opportunity for asset managers

Insights into private markets and venture may provide a real competitive edge for asset managers in demonstrating to investors an understanding of innovation and disruption and how this affects public market portfolios

Europe’s response to COVID-19

European real GDP is now projected to contract by 7 per cent in 2020, its biggest decline since World War II, followed by a rebound of 4.7 per cent in 2021. But the recovery’s strength will depend crucially on the course of the pandemic, people’s behavior, and the degree of continued economic policy support. 

Pandemic, recession, economic crisis

COVID-19 has delivered an enormous global shock, leading to steep recessions in many countries. The baseline forecast by the World Bank envisions a 5.2 per cent contraction in global GDP in 2020—the deepest global recession in decades.

Fiscal recovery packages and climate

As we move from the rescue to the recovery phase of the COVID-19 response, policy-makers have an opportunity to invest in productive assets for the long-term.

Sustainable and inclusive: recovery

As policymakers consider policy interventions to support the recovery, investors should be engaging policymakers by providing technical expertise and allocating capital to sustainable investments. A new report by PRI presents a series of recommendations for investor policy engagement and indicative proposals for action.

The voice of business

The Future of the Corporation programme is the British Academy's review of the role of business in society. It combines research from a range of academic disciplines with insight from senior business and policy leaders.

Global policy tracker

The HBS Global Policy Tracker is an initiative to collect and standardise economic policies implemented around the world as a response to the COVID-19 pandemic. It focuses on fiscal policy, monetary policy, and lockdowns. The data is updated in real-time with the efforts of several dozen students and staff at Harvard Business School and other Harvard Schools.

Where is the illiquidity premium?

Investors allocate to private equity with the expectation of achieving superior returns relative to public-market investments. This approach has generally paid off in corporate private equity with return premiums that have compensated investors for the risk of illiquidity. However, the same cannot be said for real estate private equity.

REIT recovery buying

The global health crisis and recession have turned property markets upside down in dramatic fashion, as shelter-in-place orders have given certain tenants the economic and political cover to avoid or delay rent payments.

Embracing tech disruption

Reflections from Sonal Desai, chief investment officer, Franklin Templeton Fixed Income from the Franklin Templeton 2019 Global Investor Forum.

The big book of SI

Sustainability investing - meeting the needs of the present generation without compromising those of generations to come.

Quantitative science

Fixed income investing has undergone a sea change in the past decade. By tossing out some active management orthodoxies and embracing new technologies and quantitative techniques, we believe some managers are better equipped to capture unique insights and excess returns for their clients.

How RI should be responding to COVID-19

The PRI is working with signatories to further develop thinking on what the COVID-19 crisis means for investors. It is establishing two signatory participation groups to coordinate and develop investor responses, focusing on short term responses, and a future economic recovery phase.

COVID-19: Implications for business

In this note McKinsey & Company offers its latest insights on the COVID-19 pandemic, starting with a survey of the current epidemiology and the five dynamics leaders need to watch.

Impact of COVID-19 on globalisation

This paper argues that the COVID-19 pandemic is an inevitable result of globalisation and that the pandemic, in turn, has seriously threatened the world’s globalisation, but adverse effects on globalisation will be temporary.