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How are investors positioning portfolios and managing short and-long term risks in the current environment?[vc_quotes layout=”accordion” 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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.
Political regimes around the world are stuck in a series of dead-ends and despair. Most importantly, the China-US relationship has hit a brick wall as their fundamentally different values and interests clash. Deterrents and robust policy is the only way forward, says Stephen Kotkin, professor in history and international affairs, Princeton University.
Nobel prize winner Esther Duflo suggests institutional investors can help alleviate poverty by fostering new supply chains and looking beyond a country's credit rating. She said there is an "unacceptable" level of poverty amongst Africa Americans and Latinos who are keeping the US economy going but dying for it.
Global asset manager Robeco has found proactive stewardship triggers important changes in corporate behaviour. Chief executive Gilbert van Hassel urges FIS 2020 Digital delegates to do the same.
In a fireside chat, CIO of CalPERS Ben Meng talks about how the fund wants to use leverage to push deeper into private assets, while Ronald Wuijster, chief executive officer, APG Asset Management said the policy response has made taking advantage of buying opportunities difficult.
Investors should use stewardship to encourage purposeful companies that provide long-term value by meeting the needs of multiple stakeholders and helping improve society. But what is a purposeful company?
Understanding the two policy making camps in China - one which is concerned about debt and one which is worried about a slowdown in growth - is key to understanding China's position in the global economy, says professor of finance at Peking University, Michael Pettis.
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