[vc_empty_space height=”10px”]
How are investors positioning portfolios and managing short and-long term risks in the current environment?[vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Ben%20Meng%22%2C%22job_role%22%3A%22Chief%20investment%20officer%2C%20CalPERS%20(United%20States)%22%2C%22content%22%3A%22Yu%20(Ben)%20Meng%20rejoined%20CalPERS%20in%20January%202019%20as%20chief%20investment%20officer%20(CIO).%20He%20oversees%20an%20investment%20office%20of%20nearly%20400%20employees%20and%20manages%20investment%20portfolios%20of%20roughly%20%24400%20billion%2C%20including%20the%20Public%20Employees%E2%80%99%20Retirement%20Fund%20and%20affiliate%20funds.%5CnYu%2C%20a%20US%20citizen%20born%20in%20China%2C%20returned%20to%20CalPERS%20after%20more%20than%20three%20years%20as%20the%20deputy%20CIO%20at%20the%20State%20Administration%20of%20Foreign%20Exchange%20(SAFE)%2C%20the%20largest%20asset%20pool%20in%20the%20world%20with%20assets%20under%20management%20of%20over%20%243%20trillion.%5CnPrior%20to%20his%20time%20at%20SAFE%2C%20he%20served%20at%20CalPERS%20for%20seven%20years%20with%20his%20last%20role%20as%20the%20investment%20director%20of%20asset%20allocation.%20He%20also%20was%20a%20portfolio%20manager%20in%20fixed%20income.%5CnBefore%20joining%20CalPERS%20in%202008%2C%20Yu%20worked%20at%20Barclays%20Global%20Investors%20as%20a%20senior%20portfolio%20manager%2C%20Lehman%20Brothers%20as%20a%20risk%20officer%2C%20and%20Morgan%20Stanley%20as%20a%20fixed-income%20trader.%5CnHe%20also%20serves%20as%20a%20member%20of%20the%20Future%20of%20Finance%20Advisory%20Council%20(CFA%20Institute)%20and%20is%20an%20associate%20editor%20for%20the%20Journal%20of%20Investment%20Management.%5CnIn%202014%20Yu%20was%20the%20recipient%20of%20the%20Cheit%20Award%20for%20Excellence%20in%20Teaching%20at%20the%20Haas%20School%20of%20Business.%20He%20holds%20a%20master’s%20degree%20in%20financial%20engineering%20from%20the%20Haas%20School%20of%20Business%20at%20the%20University%20of%20California%2C%20Berkeley%2C%20and%20a%20doctorate%20in%20civil%20engineering%20from%20the%20University%20of%20California%2C%20Davis.%5Cn%22%2C%22image%22%3A%2231921%22%2C%22linkedin%22%3A%22%22%7D%2C%7B%22name%22%3A%22Ronald%20Wuijster%22%2C%22job_role%22%3A%22Chief%20executive%2C%20APG%20(The%20Netherlands)%22%2C%22content%22%3A%22Ronald%20Wuijster%20has%20been%20appointed%20as%20executive%20board%20member%20of%20APG%20Group%20NV%20as%20of%20March%202018%2C%20and%20has%20also%20been%20a%20member%20of%20the%20APG%20AM%20Management%20board%20since%20February%202010%20and%20CEO%20APG%20AM%20since%20May%202017.%5CnWuijster%20has%2030%20years%20of%20experience%20in%20the%20investment%20world%2C%20including%2020%20years%20in%20executive%20and%20managing%20director%20roles.%20He%20has%20held%20a%20number%20of%20top%20positions%20at%20APG%20since%202006%2C%20including%20managing%20director%20strategic%20portfolio%20management%20and%20chief%20investment%20officer.%20%5CnHe%20is%20responsible%20for%20the%20asset%20management%20portfolio%20and%20as%20such%20is%20ultimately%20responsible%20for%20advising%20on%20and%20implementing%20the%20investment%20policy%20of%20the%20pension%20funds%20serviced%20by%20APG.%20The%20APG%20Group%20manages%20%E2%82%AC475%20billion%20in%20pension%20assets%20and%20ensures%20that%20over%204.5%20million%20people%20can%20be%20confident%20that%20their%20accrued%20pension%20rights%20are%20being%20invested%2C%20administered%2C%20and%20paid%20out%20correctly.%5CnBefore%20joining%20APG%2C%20he%20held%20various%20managing%20directorships%20at%20Robeco%2C%20in%20the%20areas%20of%20corporate%20strategy%2C%20development%2C%20equities%2C%20private%20equity%20and%20research%2C%20among%20other%20positions.%20%5CnRonald%20Wuijster%20is%20currently%20a%20board%20member%20of%20DUFAS%20(Dutch%20Fund%20and%20Asset%20Management%20Association)%20and%20a%20member%20of%20the%20MSCI%20Advisory%20Council%20(Morgan%20Stanley%20Capital%20International).%5CnRonald%20Wuijster%20studied%20business%20economics%20and%20law%20at%20Erasmus%20University%20in%20Rotterdam%20and%20psychology%20in%20Leiden.%20He%20is%20married%20and%20has%20three%20children.%5Cn%22%2C%22image%22%3A%2231922%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fronaldwuijster%2F%22%7D%5D” title=”Speakers” el_class=””][vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Amanda%20White%22%2C%22job_role%22%3A%22%20Director%20of%20institutional%20content%2C%20Conexus%20Financial%20(Australia)%22%2C%22content%22%3A%22Amanda%20White%20is%20responsible%20for%20the%20content%20across%20all%20Conexus%20Financial%E2%80%99s%20institutional%20media%20and%20events.%20In%20addition%20to%20being%20the%20editor%20of%20Top1000funds.com%2C%20she%20is%20responsible%20for%20directing%20the%20global%20bi-annual%20Fiduciary%20Investors%20Symposium%20which%20challenges%20global%20investors%20on%20investment%20best%20practice%20and%20aims%20to%20place%20the%20responsibilities%20of%20investors%20in%20wider%20societal%2C%20and%20political%20contexts.%20She%20holds%20a%20Bachelor%20of%20Economics%20and%20a%20Masters%20of%20Art%20in%20Journalism%20and%20has%20been%20an%20investment%20journalist%20for%20more%20than%2025%20years.%20She%20is%20currently%20a%20fellow%20in%20the%20Finance%20Leaders%20Fellowship%20at%20the%20Aspen%20Institute.%20The%20two-year%20program%20seeks%20to%20develop%20the%20next%20generation%20of%20responsible%2C%20community-spirited%20leaders%20in%20the%20global%20finance%20industry.%22%2C%22image%22%3A%2231872%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Famanda-white-101a7515%2F%22%7D%5D” title=”Moderator” el_class=””][vc_empty_space height=”10px”]
Key takeaways
Ben
Going forward, private equity will represent the best opportunity to exceed our target return. We are exploring unique ways to increase our exposure.
We cannot hide from risks if we want to hit the target return.
We have invested time in building a balance sheet liquidity management framework
Not all uses of liquidity are equal, nor are the sources (in terms of costs or reliability for example).
Our pre-emptive planning work around 10 pathways to liquidity on demand helped up keep calm and carry on.
We see the greatest opportunity in private markets.
Ronald
In the first 8 weeks of the crisis we focused on modelling 3 scenarios – ‘the good, the bad and the ugly’.
High inflation rate would be a surprise but a possible scenario (for example price rises in petrol or medicines due to high consumption).
The Florida State Board of Administration has made some strategic moves to take advantage of opportunities in the dislocation, including in private equity, distressed debt and active listed equities.. But CIO, Ash Williams, is concerned about the underlying real economy.
Fraud and falsehoods are nothing new but technology has made it much more difficult to separate fact from fiction. Professor Stephen Kotkin discussed investing in a world of deception.
Are the two world powers on a collision course for war? Could global investors get smashed between the two? Unfortunately, the answers appear to be yes and yes.
There is growing recognition that globalisation has a downside. But whether they are mitigated, or continue on the current course, investors should be looking to safeguard their portfolios.
The implications for investors of the inclusion of China A-shares in the wider MSCI indexes, an inevitable outcome, will be discussed at the Fiduciary Investors Symposium at Yale in October.
Geopolitical risk is largely priced in to markets according to the John P. Birkelund ’52 Professor in History and International Affairs at Princeton University, Stephen Kotkin.
Former Governor of the US Federal Reserve, Ben Bernanke, says there are no foreseeable shocks to the financial system. In any case, he says, the system itself is so much more robust than it was before the crisis, that it could weather the storm. The only possible cause for concern is geopolitical risk. Risk
Leave a Comment
You must be logged in to post a comment.
Login