I chat with Alex on his experiences across a range of environments, the role of machine learning in Australia’s future and how to best deploy data science in academia and industry.
Nothing on this podcast is to be considered investment advice or a recommendation. No investment decision or activity should be undertaken without first seeking qualified and professional advice.
In a high-level exchange between two of the world's largest and most sophisticated asset owners, CPP Investments’ chief executive John Graham shared a leadership lesson with Norges Bank Investment Management chief executive Nicolai Tangen: having an aligned senior team is one of the most critical things a leader can build. The two funds, which are consistently leaders in transparency, also exchanged playbooks on managing bureaucracy at large organisations.
The incorporation of ESG factors within the investment process has evolved from a nice-to-have to a necessity. Client demand has grown strongly, with 68% of the PRI’s asset owner signatory base addressing ESG considerations in their requests for proposals (RFPs). This means that many asset owners expect investment managers to include financially material ESG factors within their funds and investment strategies. In addition, policy makers around the world are introducing regulatory requirements for both investment managers and asset owners to disclose and report on responsible investment practices.
A growing number of asset owners now expect their investment managers to incorporate ESG factors into their investment processes. This means that ESG needs to be at the core of the relationship between the asset owner and the investment manager – and that ESG considerations need to be addressed at every stage of that relationship, from setting the initial investment strategy, to drafting requests for proposals, to selection, appointment and monitoring.
Asset owners increasingly include ESG considerations in their investment management agreements (IMAs) and other legal documentation. More than two-thirds (69%) of PRI asset owner signatories typically implement ESG requirements in contracts such as IMAs and limited partner agreements (LPAs).1 To ensure that investment managers abide by their clients’ ESG requirements, certain legal aspects are becoming standard features of the asset owner-investment manager relationship.
With fiscal policy now the dominant lever supporting growth in most economies, it has become even more important to understand how the various fiscal policies will flow through to GDP, inflation, and different markets. We have been working to get our understanding of fiscal policy to the same level as our understanding of monetary policy. This is a difficult task, as fiscal comes in so many forms, each having different implications at the macro and micro levels. Some policies can be clearly counter-cyclical (the best of these are typically direct checks and shovel-ready infrastructure), while others aim to address more structural problems (like low productivity or environmental issues) but are less effective cyclically, as they are typically longer-term.
Against all odds, there is an air of optimism in 2021. We have entered a new era in US politics, and the inauguration of the Biden-Harris administration brings renewed hope for sustainable investment, particularly climate policy. So what can investors expect?
The crisis has accelerated the industry’s adoption of technology for manager due diligence an area where it has traditionally lagged, according to founder of Inalytics Rick di Mascio who after 30 years in the job knows how to identify manager skill.
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