This session takes an indepth look at an issue being discussed around every investment table… inflation.
It looks at whether inflation risk exists and how different asset classes behave in inflation regimes. It asks whether inflation is entirely negative for portfolios and under which scenarios inflation is desirable and controllable. It questions whether there is a new relationship between growth and inflation, or whether historic patterns will prevail and, if so, which ones.
Click here to view Patrick’s presentation slides[vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Patrick%20Zweifel%22%2C%22job_role%22%3A%22Chief%20economist%2C%20Pictet%20Asset%20Management%20(Switzerland)%22%2C%22content%22%3A%22With%20over%20two%20decades%20of%20experience%20at%20Pictet%2C%20Zweifel%20has%20been%20crucial%20in%20building%20the%20firm%E2%80%99s%20macroeconomic%20research%20capabilities.%20At%20Pictet%20Asset%20Management%2C%20he%20leads%20a%20team%20of%20four%20economists.%20Zweifel%20plays%20a%20key%20role%20producing%20research%20that%20helps%20shape%20the%20global%20investment%20strategy%20of%20the%20firm%20and%20which%20is%20fundamental%20to%20the%20investment%20decisions%20of%20fund%20managers.%20His%20analysis%20helps%20identify%20structural%20imbalances%20and%20business%20cycle%20turning%20points%20through%20the%20use%20of%20proprietary%20quantitative%20models%20and%20leading%20indicators%20on%20activity%20and%20inflation.%5Cn%5CnZweifel%E2%80%99s%20interest%20for%20emerging%20and%20Asian%20economies%20began%20following%20his%20work%20on%20International%20Economics%20for%20the%20World%20Bank%20and%20for%20the%20European%20Commission%20in%20the%20mid-1990s.%20He%20went%20on%20to%20teach%20econometrics%20and%20monetary%20theory%20at%20HEC%20Lausanne%20and%20HEC%20Gen%C3%A8ve%20until%20he%20joined%20Pictet%20Wealth%20Management%20in%201997%2C%20where%20once%20again%20he%20focused%20on%20emerging%20markets%20and%20currencies%20and%20rose%20to%20head%20of%20macro%20research.%20Zweifel%20then%20joined%20Pictet%20Asset%20Management%20as%20chief%20economist%20in%202009.%20He%20holds%20a%20PhD%20in%20Econometrics%20from%20the%20University%20of%20Lausanne.%22%2C%22image%22%3A%2244163%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fpatrick-zweifel-pam%2F%3ForiginalSubdomain%3Dch%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%22Director%20of%20institutional%20content%2C%20Conexus%20Financial%20(Australia)%22%2C%22content%22%3A%22White%20is%20responsible%20for%20the%20content%20across%20all%20Conexus%20Financial%E2%80%99s%20institutional%20media%20and%20events.%20She%20is%20responsible%20for%20directing%20the%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%2C%20as%20well%20as%20promote%20the%20long-term%20stability%20of%20markets%20and%20sustainable%20retirement%20incomes.%20She%20is%20the%20editor%20of%20conexust1f.flywheelstaging.com%2C%20the%20online%20news%20and%20analysis%20site%20for%20the%20world%E2%80%99s%20largest%20institutional%20investors.%20White%20has%20been%20an%20investment%20journalist%20for%20more%20than%2020%20years%20and%20has%20edited%20industry%20journals%20including%20Investment%20%26%20Technology%2C%20Investor%20Weekly%20and%20MasterFunds%20Quarterly.%20She%20was%20previously%20editorial%20director%20of%20InvestorInfo%20and%20has%20worked%20as%20a%20freelance%20journalist%20for%20the%20Australian%20Financial%20Review%2C%20CFO%2C%20Asset%20and%20Asia%20Asset%20Management.%20She%20has%20a%20Bachelor%20of%20Economics%20from%20Sydney%20University%20and%20a%20Master%20of%20Arts%20in%20Journalism%20from%20the%20University%20of%20Technology%2C%20Sydney.%20She%20was%20previously%20a%20columnist%20for%20the%20Canadian%20publication%2C%20Corporate%20Knights%2C%20which%20is%20distributed%20by%20the%20Globe%20and%20Mail%20and%20The%20Washington%20Post.%20White%20is%20currently%20a%20fellow%20in%20the%20Finance%20Leaders%20Fellowship%20at%20the%20Aspen%20Institute.%20The%20two-year%20program%20consists%20of%2022%20fellows%20and%20seeks%20to%20develop%20the%20next%20generation%20of%20responsible%2C%20community-spirited%20leaders%20in%20the%20global%20finance%20industry.%22%2C%22image%22%3A%2235225%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Famanda-white-101a7515%2F%3ForiginalSubdomain%3Dau%22%7D%5D” title=”Moderator” el_class=””][vc_empty_space height=”10px”]
Inflation is set to rise further but the consequences are not all bad
It is important to distinguish between the two sources of inflation – supply side or demand side and how each feeds into different cycles.
Goods have a much lower share in most inflationary indices compared to services.
Uncertainty about consumption spending could cool inflation as could uncertainty about how much of this spending will be tilted to services.
Avoiding risk assets when growth is low; good inflation hedges include gold and inflation linked bonds.
Inflation can occur in a period of strong or low growth.
Emerging market equities and fixed income (hard and local currency) also offer investors opportunities, performing well in a climate of strong growth and rising inflation.
Investors should look at emerging markets in the context of their own growth, rather than comparing growth to developed markets.
The big difference between the vaccine rollouts and the scale of the stimulus measures across the world could result in a K-shaped global economic recovery, with much of the developed world booming but poorer countries continuing to struggle. However the
A lack of transparency and sound data remain huge challenges in many emerging markets. The panel discussed the link between governance principles, asset prices, trust in government and investment volatility and what investors can do about it.
What technological tools are investors using in a remote environment including more innovative ways to do due diligence? What behaviours and processes have changed because of COVID and lockdown?
Wei Xie explained the OPTrust focus on two subdomains of machine learning - reinforcement learning and uncertainty modelling - and how they can be used together.
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