There are many differences between the 2008 financial crisis and the 2020 COVID-19 induced economic crisis, not the least of which is how the policy makers have responded. In 2008 the bailout of the banks was the focus, and in 2020 the bailout of the consumer was the focus. So why have governments been focusing on the consumer, and what does that mean for investment opportunities? Is this a long-term thematic that investors should be navigating in their investment allocations?[vc_quotes layout=”accordion” 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Key takeaways
Will
This is a very weird crisis due to the level of government support being thrown at consumers.
Consumer risk transfer from banks to asset managers will continue into the future.
We believe there is still a demand for quality real estate offices in the future however retail will be challenged. Offices will not go away but it is an opportunity to upgrade and reconsider what type of space is needed.
All private asset markets have their own cycles. The real challenge is to find a market that is not commoditised.
Peter
The S of ESG is increasing in importance.
China was strong before the pandemic and even stronger now.
Physical due diligence is likely to return as soon as possible.
The extent of de-urbanisation is possibly overstated.
Matt
We are all in the same COVID storm but we are in two very different boats in terms of how people have been impacted. Young people, those with children and the self-employed are particularly vulnerable.
There have been many habitual shifts during COVID – Cash usage in the UK has been down c. 60%, and non-cash payment methods are likely to continue in the future. The buy now pay later trend has been greatly accelerated during COVID. There has also been a big shift to supporting local businesses, to investing in one’s home and spending on hobbies.
Retail has hardship but also pockets of huge opportunity.
APG's CIO Peter Branner explains how the pandemic has accelerated key trends already underway around digitization, central bank policy and action to combat climate change. It all points to fierce competition for private assets.
Protected by furlough schemes and mortgage holidays and saving money working from home, many consumers have come through the pandemic in better financial health than they were before. It could pose an exciting investment opportunity, say a panel of FIS 2020 Digital experts.
Three investors reflect on the what lies ahead highlighting a buoyant 2021 but challenges beyond. Their suggestions include allocations to real assets and diversifying out of traditional fixed income as they navigate portfolio construction considerations in a new investment paradigm.
Rebecca Patterson, Bridgewater's director of investment research, says MP3 is the new backdrop that will influence all outcomes in 2021 with the medium term characterised by low interest rates and the possibility of higher inflation.
PGIM's chief economist and head of global macroeconomic research, Nathan Sheets, outlines what Biden's priorities will be and how his key appointees will lead their departments. He also explains why he believes inflation will remain low and that investors will increasingly move into risk assets.
Asset owners from 23 countries are reacting differently to inflation expectations, with almost half already hedging their portfolios but 20 per cent consider inflation is unlikely.
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