Listen to our podcast of the full speech by Myron Scholes at the Fiduciary Investors Symposium, Breaking The Mould On Asset Allocation: Strategic Versus Dynamic, as well as a Q&A session with editor, Amanda White.

Myron Scholes

Investors need to be patient and harvest the power of compound returns, urged Myron Scholes, the Frank E. Buck Professor of Finance, emeritus, at Stanford University, and a Nobel laureate in economic sciences.

Speaking at the Fiduciary Investors Symposium at Stanford University, Scholes also urged investors to use option prices as a source of information about risk to enhance compound returns. He said many investors ignored this valuable data that exists in the market.

Examining option prices would allowed investors to reduce losses from market downturns and better participate in the upside, Scholes explained. Think of the investors forced to sell during the GFC who were never able to participate in the ensuing upside, he told delegates.

“If they had lost less, they would have had more power to enhance returns going forward,” he said.

Scholes explained that the option market acted like a warning sign, telling investors what “the crowd” was saying and how the probabilities of gains and losses had changed. If the price of options, or insurance, goes up, it means the risk has gone up. He urged investors not to measure everything in “the rearview mirror” but to look into the future and warned that excessive volatility – deduced through option prices – reduced compound returns. He said options also allowed investors to “compute the tails” and work out expected tail gains and losses.

Scholes told delegates that many investors see risk as a risk of loss, and not as a risk of volatility. He also noted that many investors have tracking error constraints in place, underscored by a belief that they shouldn’t deviate too much from the benchmark and benchmark returns. Yet he urged investors to look more at how performance compounds over time. He said compound returns were very different to the average returns, or Sharpe ratios, that investors measure. Compound returns are not determined by “little averages” and “standard deviations” or “ups and downs over each period”, he explained, they are determined by tails of distribution. These big losses or big gains are the events that matter to investors.

“It is like our lives,” he said. “It is not the little things but the big things that we remember.” The tails, or things that happen in the extremes, are where investors should focus; Scholes said tail distribution was where “the action is” rather than “the middle” and that “focusing on the extremes has the most value for everyone”. He urged portfolio managers to move on from static allocations.

Scholes also told delegates the benchmark constraints that passive investors favoured could be costly because they stopped investors from reducing risk. He said that when markets grew rocky, asset managers tended to go to the benchmark rather than switch to cash.

“The benchmark is their safe harbour,” he said; however, this is not always the best way to invest. People say passive strategies with a low tracking error are low cost, yet these strategies don’t have any risk management, he warned. Passive and benchmark-static strategies are risk-changing strategies; sometimes the risk is high and sometimes it’s low. The cost of monitoring managers goes down with passive strategies, yet there is also a cost in lost returns inherent in tracking error constraints, which he calculated could be 2-3 per cent a year.

Scholes said many investors focused on building strategic portfolios, best-sector allocations, and securing the managers who give alpha. He called this “clapping with one hand”. The other hand should be measuring risk and looking at how volatility changes how the tails of the distribution are being affected.

Scholes also highlighted challenges around diversification. He said all growth assets could become highly correlated. He told delegates that “diversification is free when you don’t need it” but when you do, assets become highly correlated.

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Investors are improving fee alignment with their asset managers, renegotiating old fee structures and ensuring they pay only for skill, a panel of experts told the Fiduciary Investors Symposium at Stanford University.

Albourne Partners chief executive John Claisse has helped asset owners such as the $140 billion Teacher Retirement System of Texas develop a new structure for hedge fund fees with a 1-or-30 model. Under this system, investors agree to pay more for alpha than the traditional 20 per cent. And although investors prefer to only pay for excess returns, under this model they also pay a fixed management fee to enable the manager to “keep the lights on” during periods of underperformance. Crucially, the management fee is an advance on future performance fees – managers need to earn the management fee back before they receive performance fees.

“We were set a goal to put in shape a structure that was easy to explain and where Teachers retained 70 per cent of alpha,” Claisse recalled.

He also noted that investors shouldn’t pay high fees for systematic strategies.

“There are now many ways to access underlying drivers of hedge fund strategies through risk premia,” he told delegates. These strategies have created an investable alternative that is liquid and transparent and makes it easy for investors to assess whether they are genuinely getting alpha. “The pressure on hedge funds to justify returns has never been greater,” Claisse said. “Don’t pay for expensive beta, pay for skill.”

Scott Radke, principal at New Holland Capital, which advises €475 billion ($585 billion) Dutch pension fund APG on fees, told delegates it was important for asset owners to write fee principles. This gives investors a methodology to measure fees and allows real flexibility.

“Set out in advance a philosophy to guide your negotiations,” Radke advised. He said asset owners often find themselves between a rock and hard place, squeezed between their boards and a governance structure both fighting to keep fees low, and asset managers – gatekeepers to the strategies they want to access – pushing high fees.

“They should establish ground rules of acceptable fee structures,” he said.

These ground rules could include an acceptable level of management fees, or an agreement to pay performance fees at particular hurdles; for example, in illiquid strategies, this could mean paying fees only on realised returns.

Radke also suggested that asset owners do more to measure fees. APG compares fees across its asset classes, looking at what it is paying for fees for similar strategies and what it is paying as a percentage of alpha generated. It is a model that helps pension funds assess what percentage of gross alpha goes to the manager and what they get to keep. For example, investors can adjust fees accordingly if a mandate is illiquid or with a new and unproven manager.

“These kinds of things can be reflected, and the fees can be put fees in context,” Radke said.

He also urged investors to be flexible on fees and not to fix them at set rates. This way it is easier to negotiate with managers. Some managers may value a hurdle rate, others will value a management fee, he said.

Five years ago, C$286.5 billion ($233.3 billion) Canadian investor Caisse de dépôt et placement du Québec (CDPQ) overhauled its fee system in external public markets including hedge funds, senior vice-president Mario Therrien said. The pension fund wanted to reduce the opacity, complexity and cost of fees, he told delegates. In a parallel strategy, CDPQ also reduced fees by developing more nuanced strategies that were market neutral, trend following, or quant driven.

CDPQ’s analysis looked at how much it paid managers and the fund’s call for more transparency revealed the strategies its managers used to generate their performance.

“We are not against paying higher fees,” Therrien said, adding that the challenge was to better understand the processes. The fund’s analysis also found an often wide disparity between what hedge funds charged and the value they added.

“It provided a new lens to the investment committee,” he said.

In a change, the panel also observed how smaller investors are now better able to negotiate fees with managers.

“We have clients who have hedge fund portfolios where the individual investments are small, but they have gone back to their managers to negotiate fees”, Claisse said. “We are seeing many hedge fund portfolios where managers have changed the fee terms in a win-win.”

In today’s environment, fees are not necessarily lower, and investors may pay as much if not more if a manager does well; however, when returns are low, investors are not paying as much and there are “no awkward conversations”.

Investors can integrate risks from climate change into their portfolios, a panel of experts said at the Fiduciary Investors Symposium at Stanford University.

Delegates heard that the impact of climate change on their portfolios could span a drought hitting hydro power assets, major crop failures, the growing scarcity of agricultural land and the coal exposure sitting on Indian banks’ balance sheets.

Jaap van Dam, principal director, investment strategy, at the $268 billion Dutch pension fund PGGM, said many of the most significant global risks came from climate change and would “hit investors sooner or later”. Integration at PGGM means the fund now looks at climate change through different lenses, comprising technological disruption, resource availability, and the physical impact of climate change and policy risks such as a carbon tax.

“These lenses help us analyse the uncertain consequences of climate change,” van Dam said.

PGGM uses a carbon footprint in its active equity portfolio, the pension fund’s risk department runs climate stress-testing models and it also uses big data to analyse risk in its real estate and infrastructure portfolios.

“We can measure impact on different sectors and avoid stranded assets in the portfolio,” he says.

The International Centre for Pension Management has recently written a guide on climate change for asset owners, which offers a roadmap for integrating climate change into portfolios. It details the importance of ensuring that management and the board “own the problem”, to set a tone that permeates the organisation. Van Dam said strategy must involve internal teams and external stakeholders.

“Implementation seems simple, but it isn’t,” he said. He suggested investors start with baby steps, get experience and build on it.

At the $335 billion California Public Employees’ Retirement System, integration has included the fund targeting the biggest emitters in its vast equity portfolio, which accounts for about 48 per cent of assets under management.

“We have the right and responsibility to make sure climate risk is being dealt with,” said Anne Simpson, CalPERS’ investment director, global governance.

CalPERS’ size and diverse investment strategy means it “owns a little of everything”. Its liabilities also stretch so far into the future it can’t hide from climate risk behind traditional hedging and insurance strategies. Simpson noted that even a diverse portfolio wouldn’t protect the pension fund from the pervasive impact of climate change, which bleeds into different assets and allocations.

The fund’s strategy has focused on finding which companies in its portfolio are responsible for the most emissions. By working with partner investors and the UN-backed Principles for Responsible Investment, CalPERS found that of the 11,000 companies it held, fewer than 100 were responsible for the vast majority of emissions and were “systemically important greenhouse-gas emitters”.

The revelation allowed the pension fund “to get organised” and start pushing for strong governance, disclosure and climate-competent boards. Simpson noted that only 1 in 10 companies provide incentives for board members to manage climate risk. Delegates heard how strong corporate boards were important because investors can’t “step in” and write business plans for companies. What they can do is make sure boards are independent, competent and diverse, with a pool of talent that can take on risk.

“We want board alignment and disclosure,” Simpson said. “If there is no progress, we will use ownership to drive change.”

CalPERS is also independently benchmarking corporate progress. “We hear that big emitters are promising to make cuts, but we want independent validation”, Simpson told delegates. Noting how “when talk fails” the pension fund will take action to hold boards accountable, she pointed to the difference between oil majors in the US and Europe. Exxon and Chevron have not engaged to the same extent as oil majors in Europe, such as Total and Shell, which have begun a transition. She also noted the importance of cajoling fund managers to “line up” with this as well.

It is a point PGGM’s Van Dam picked up, noting that fund managers have short-term returns but climate change is a long-term challenge. Asset owners can bridge the problem with proactive governance and by knowing their subject matter.

“If you run an unlisted real-estate portfolio, it is very clear you need to deal with energy efficiency within the building,” he says. Integrating climate strategies into public passive mandates “is easier than you think”, via carbon tracking strategies and engagement, he explains. It is more challenging integrating climate risk into active public equity mandates that are run externally; however, he notes “sound conversations with investment managers on these challenges” are now much more common. Strategies could include giving managers a carbon budget that declines over time, or changing the benchmark. If all else fails, look for another manager, he says.

Delegates also heard how pension funds’ fiduciary responsibility to earn returns is inherently linked with navigating the risk of climate change.

“There was nothing good about Peabody,” Simpson said, referring to former US company Peabody Energy, which was the world’s biggest privately held coal company but filed for bankruptcy. Stranded assets pose similar risks, she explained.

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At the 2018 Fiduciary Investors Symposium Amory Lovins, co-founder and chief scientist at Rocky Mountain Institute delivered a speech on Disruptive Energy Futures: Risks And Opportunities. You can listen to his talk in full below or download his presentation and notes here.

Investors need to prepare for unprecedented change in the oil, auto and electricity industries, said Amory Lovins, co-founder and chief scientist at the Rocky Mountain Institute, in the opening speech to the Fiduciary Investors Symposium at Stanford University on Sunday. Speaking to delegates who represented 87 asset owners from 14 countries, accounting for a combined $8 trillion in assets under management, Lovins talked of unprecedented opportunity and hope in the coming years.

The electricity industry is undergoing its biggest transformation in centuries as supply shifts to modern renewables. Renewable energy production hit 1 trillion watts of capacity three years ago, the next trillion watts will be added in just four years, pushing fossil fuels out of the market, Lovins said. He added that fossil fuels were more at risk from competition than regulation.

“In the next 4-5 years, cheaper renewables will offset growth in all fossil fuels, tipping them into decline,” he warned.

Last year, modern renewables accounted for 64 per cent of the world’s net additional generating capacity. By 2020, renewables will beat fossil fuels in every major region on earth.

He spoke of an “end game” that would put $25 trillion of energy infrastructure at risk and threaten not only national economies that depended on oil and gas revenues but also the energy firms that dominate equity and debt capital markets. It would also affect non-energy sectors such as the auto and steel industries, leading to price declines, stranded assets and massive restructuring, he said.

Lovins also warned gas was no safe haven among fossil fuels; all of them, including gas, are in “deep trouble” against unsubsidised renewables, he said, as he warned there would be stranded assets from planned gas power plants in the US.

“I hope these won’t be your dollars,” he told the conference. “Global gas demand will dwindle in step with oil.”

Two-fifths of India’s coal plants are already stranded assets and those not yet built are pre-stranded assets, he said. China has cancelled many of its coal developments and is cutting capacity at its existing plants by 2.5 per cent each year. Disruptors are also entering the utility industry, “gobbling” revenues before firms can adapt. For example, customers are discovering how to use less electricity, make their own, and even trade it. Dutch consumers can now buy renewable electricity directly from one another.

Solar wins

Solar output worldwide “is scaling faster than cell phones”, Lovins said. In 2013, China added more photovoltaic (PV) capacity than the US added cumulatively in the previous 59 years; last year, china added more PV in the month of June than the US added in the whole year. And the cheaper solar becomes, the more people buy it.

Lovins also answered critics who argued that fossil fuels were a better energy source because renewables were variable.

“Variable doesn’t mean unpredictable,” he said, adding that operators run grids like a conductor – no instrument plays all the time but the ensemble always makes lovely music. Indeed, Lovins pondered whether the grid itself would become a stranded asset, just as copper wire was bypassed by wireless phones.

Cars: PIGS give way to SEALS

There are now an estimated 4 million electric vehicles on the road, with a forecast for a million more every six months. The price of these cars is forecast to reach parity with petrol vehicles by the early 2020s. “Scornful” and “underperforming” automakers will scramble for catch up.

Lovins said the auto and electricity industries were coming together to “eat” the oil industry and would put it out of business as the world switched to renewables and electric cars. China sold more electric vehicles last year than the whole world sold the previous year. India and Germany were targeting 100 per cent electric vehicles by 2030 in growth that would be fanned by falling battery costs and batteries that didn’t use lithium or cobalt or anything “scarce or flammable or toxic” but had a comparable or better performance than traditional batteries, he said.

Modern design is also feeding electric vehicle growth, with new, lighter hybrid models emerging. Lovins said PIGS (personal internal-combustion gasoline steel cars) were giving way to SEALs (sharable electric autonomous lightweight cars.)

‘Dollars on the table’

In the absence of policy leadership, smart cities and state policies were leading the way, together with business, Lovins said.

“The private sector smells dollars on the table,” he said, noting that the world is moving towards the Paris Agreement’s 2-degree goal and adding that there is no need for despair but nor should the world be complacent. We must “double down” on what makes sense – and steer money and capital in that direction, he said.

Lovins predicted that higher oil prices would help drive change at such a great pace that it would be a formidable challenge.

“When value propositions change, markets flip with breathtaking pace,” he said, pointing to the switch from horses to cars in the 1900s, which took just 13 years.

“The horse-and-buggy industry thought they had years to adapt,” he said, adding that the change was fanned by financial innovations such as car loans.

“Firms hampered by old thinking won’t be around,” Lovins said, because the pace of transformation is set by insurgents not incumbents. He said investors “flee” before customers, because capital markets sniff out disruption. When an industry is headed for the “toaster”, investors don’t wait for the toast, they invest in successors.

Lovins said that prudent and active investors find themselves at a unique tipping point and have important roles to play in stalling the risk of stranded assets and systemic risk to the financial system. He urged investors to encourage those firms they own to change because they would earn higher returns and help “crank down” the global thermostat.

Companies that changed would be heroes to their shareholders, he said, and the world.

“It is your fiduciary responsibility to enable a new energy system and not protect the old,” Lovins said.

The WK Kellogg Foundation is searching for investment opportunities in AI in its equity and hedge fund allocations.

“AI hasn’t been well-accepted by corporate America and the people who accept it and pursue it will have a competitive advantage,” Kellogg Foundation vice-president and CIO Joel Wittenberg observes.

The $3.5 billion foundation is seeking: public equity managers able to pick companies bringing AI inhouse; private equity general partners (GPs) using AI to inform decision-making; and specialist hedge fund managers using machine learning and big data to make systematic trades in strategies pioneered by industry leader Two Sigma, the $52 billion quantitative hedge fund.

The foundation is also developing an internal AI-driven model that it hopes will implement derivative strategies across asset classes.

“People who have worked their way up to the top of their organisation believe they have earned the right to make decisions,” Wittenberg says. “Yet we know that AI and machine learning can actually make better decisions than someone in their 50s following their gut instinct.”

The hunt for opportunities in AI is just one seam in the foundation’s 16 per cent allocation to hedge funds. For the last year and a half, Wittenberg has focused on selecting hedge funds for the portfolio that have a low correlation to one another. Using a detailed volatility correlation matrix, strategy has focused on picking “reasonably” volatile hedge funds that earn a “fairly high” return to secure a “really nice” Sharpe ratio or risk-adjusted return, Wittenberg explains.

The Kellogg Foundation was established in the 1930s by breakfast cereal pioneer WK Kellogg to support vulnerable children and families. It runs about a dozen different hedge fund mandates, a couple with the same manager, which focus on strategies spanning zero beta, momentum, long/short and credit. Wittenberg was treasurer at the Kellogg company for a decade, before he joined the foundation in 2009.

“People think of hedge funds as a low-volatility strategy with good absolute returns,” Wittenberg explains. “But by focusing on the relationship between the different funds and their interaction with one another, we have been able to go into higher-volatility funds to get additional returns.”

Wittenberg is also adjusting the Kellogg portfolio to gain from a downturn in illiquid credit funds, which he thinks hold the seeds of the next distress cycle. Private credit funds sprang up to fill the void left by the withdrawal of bank lending; their proliferation has led to an enormous amount of uncalled capital. Yet many investments in the sector aren’t based on solid financials, he warns.

“Loans are being made with minimal covenants and the use of leverage, especially in private equity, is high. There are yields of 6-7 per cent on these kinds of assets, but in a distressed cycle with default rates of 10 per cent, returns obviously won’t be positive,” he explains. “Some of these funds sell themselves on never having had a default, but in the last 10 years, we’ve not been through a distressed credit cycle.”

Kellogg recently sold off the bulk of its allocation to credit funds in the secondary market, where it received “incredible bids”, Wittenberg says. The foundation is now developing a multi-strategy fund that includes a dedicated distressed allocation with specialist hedge funds.

“We’ve found a few hedge funds that aren’t taking much risk now but will when the time is right,” Wittenberg says. “We are in the process of getting those accounts open, funding them a little, [being] ready to fund up when the time arises.”

Wittenberg targets an investment return of inflation plus 5 per cent and pays out about 5 per cent of the foundation’s asset value annually to its key causes. The diversified portfolio is split between a small allocation to liquidity, along with public equity, fixed income, hedge funds, and illiquid investments, which account for just over a quarter of the portfolio.

“Our focus is on value investing and downside protection: if we lose less in a down market, we will compound more and achieve our real return of 5 per cent more easily,” Wittenberg explains.

 

The Kellogg stock legacy

The portfolio was not always so diversified. The foundation was wholly invested in Kellogg stock until 1985. Further diversification came in 1998. Modern portfolio theory has led to diversification of the initial $66 million seeding of the fund, but owning Kellogg for all those years turned out to be an incredible investment.

“Kellogg has beaten the market significantly over the years and helped our success today,” Wittenberg says.

It’s a legacy that endures, since the foundation still holds more than $4 billion in Kellogg stock alongside its $3.5 billion diversified portfolio.

“We can treat the diversified portfolio with different liquidity parameters [than we could] if we didn’t have Kellogg stock,” he says.

The foundation is overweight venture capital – where Wittenberg sees opportunities shifting to European GPs – and opportunistic real estate. The non-core strategy has found “an incredible source of return” in defaulted mortgages and properties requiring renovation.

“We have found managers below the radar who have been visionary,” Wittenberg says. “Real estate has given us some additional returns that we didn’t expect at the start of the cycle.”

The foundation uses a model to measure the fees it pays in illiquid strategies that involves giving each GP a rating. Typically, he deems management fees “excessive” if they go over 2 per cent of invested capital, especially in a low-return environment. If fees reach this mark, he talks to the manager, assesses whether the charges are justified (which he observes can be the case with smaller GPs) and is prepared to walk away from investments, particularly in hedge funds.

“We are not the biggest investors so can’t always move them, but we do tell them our opinion,” he explains.

Wittenberg favours managers who charge management fees only on invested capital but is mindful of a potential payoff in paying fees on uncalled capital, too. The foundation invested in a swathe of funds in 2007 and 2008 that charged on uncalled capital because they couldn’t find attractively priced assets. It caused J-curve losses and led to “tough conversations”, he recalls. Come the financial crisis, these funds had capital at-the-ready and the short-term fee pain proved more than worth it in the long run.

In the last few decades, we have been debating how long it would take for emerging-market countries to ‘emerge’ and graduate to be developed markets. While we have experienced shining examples such as South Korea and Taiwan matching most of the developed-market countries on many different measurements, we have also experienced countries being relegated from developed markets to emerging-market classification, like Greece.

Another commonly discussed topic is whether emerging markets can truly decouple from developed markets. Emerging nations have shown compelling improvements when shocks have tested the resilience of a country. For example, even an oil price collapse and sanctions were unable to trigger a crisis in Russia on the scale of 1998. We are currently experiencing an even stronger test of the Turkish and Argentinian economic architecture, as structural inflation, bloated current account deficits and large-scale foreign currency borrowing are making a dent in each of these economies. But if we compare the current volatility to previous large-scale emerging-market crises (’97 Asian crisis or ’98 Russian default), it is clear many emerging-market countries have matured because we haven’t seen any domino effect on the broader asset class.

The current crisis is the result of original sins many emerging markets committed in the ’90s, when countries with structurally high inflation nudged the corporate sector to borrow at cheaper rates in hard currency. This caused both high debt levels and currency mismatches. Additionally, the high economic growth rates sucked in imports (raw materials, machinery, consumer goods, etc.) and forced governments to borrow more to fund the current account deficit. The famous quote about seeing who is swimming naked when the tide goes out rings true. Today’s high borrowing levels are being tested by the stronger dollar, reduced liquidity and higher borrowing costs.

We believe emerging economies’ deeper domestic capital markets can shield countries from external threats and contain damage during the transition. The recent macro-policy changes and trade war rhetoric mark the starting points of a systematic repricing of risk globally, with emerging-market economies as the canaries in the coalmine. Emerging economies will need to adapt to new realities to engineer a soft landing. They also need to navigate the volatility spinning off from the US-China trade war and investor nerves around upcoming elections in Brazil and South Africa. On the positive side, only a limited number of countries still belong in that old basket defined by structural current account deficits, high inflation, unsustainable debt profiles (foreign currency and short-duration external funding) or purely relying on the extraction sector to carry the economy forward (as in Venezuela or Angola). The rest of the emerging markets have evolved, as they have become innovation power houses with solid fundamentals (South Korea and Taiwan) or compelling manufacturing hubs with disposable incomes ahead of many Western economies’ (Czech Republic or Slovenia).

Core strength can be found in countries where policymakers have used the last two decades to develop a robust institutional domestic capital market with strong checks and balances. Additionally, it is important to create a legal and legislative framework where companies can improve their productivity but still ensure a cost-effective, productive labour force. As policymakers work towards reducing external vulnerability, they also need to be ahead of the curve and set up a regulatory framework that enables domestic capital markets to become deep and sophisticated.

Nowhere is the contrast more striking than between South Africa and Turkey. Both are in a group of five vulnerable countries (high structural inflation, reliance on external funding or commodity, high current account deficit). South Africa is equipped with one of the deepest institutional money markets, with pension funds, insurance companies and other efficient savings vehicles in place for many years. In contrast, Turkey can show only limited improvement in these areas. While both countries must work hard to reduce their external vulnerabilities, South African domestic capital has always supported the local markets, and the country has never experienced hardship on the scale Turkey is going through at the moment.

Investors are growing more positive about similar structural developments in China, where domestic capital markets are going through one of the most significant transitions. We are seeing evidence of regulatory support to create a sophisticated domestic fixed income market and mutual fund industry, while at the same time moving the economy away from shadow banking. Additionally, China must transfer its economy away from spending-driven growth and save more, while reducing its current large debt profile. The transition might come with pain, but evidence shows that deep domestic capital markets can replace retail savings as a safety valve, and the country has a better chance to cope with the change.

Secular growth

Secular growth drivers are still in place for most emerging-market economies; population growth is compelling and disposable income growth and productivity improvements have come as economies have climbed the value chain. Emerging nations need to address many systematically important vulnerabilities to reach their full potential, but at the current stage of the cycle, a deep domestic capital market can serve as one of the most important safety nets.

Egon Vavrek is head of Europe, Middle East and Africa equities at APG Asset Management. APG is the asset manager and pensions provider of the €414 billion ($487 billion) Dutch civil service scheme ABP.

 

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