War, climate change, pandemics, inflation, rising interest rates
First published in LCP’s investment magazine – VISTA Original version available at lcp.foleon.com
The job of investing involves reckoning with a huge amount of uncertainty and intersecting trends while making good decisions, screening out noise and resisting the temptation to overreact. That is, of course, easier said than done. 2022 might just be presenting one of the most difficult and testing environments investors have faced in their careers – did you have all of this in your 2022 forecast? I didn’t, no one could reasonably have, but that isn’t the point – it probably wouldn’t have mattered if you did.
Turning points is an over-used metaphor in investing, but for once might be justified this year in so many ways. Just as we appear to be emerging from Covid-19 we’re seeing inflation rates hitting levels unseen since the 1980s, interest rates finally set for the start of the first major hiking cycle in perhaps 20 years, alongside the ending of the emergency monetary policy measures that have defined much of the last decade. And there is a war in Ukraine which as well as being unimaginably awful on a human level could redefine geopolitics and global economics for a generation.
In this edition of Vista we explore the idea of turning points in several areas, while also staying focused on the core investment practices of staying open and curious to new ideas while always questioning deeply held assumptions, which is never more important than in the changing times we find ourselves in.
- Guest author Karen Ward (J.P. Morgan Asset Management) responds to the question of how investors should think about the dawning of the new rising interest rate environment.
- Laasya Shekaran captures one of the biggest shifts we’ve seen recently in the investment world, discussing how the model of Universal Owners challenges some deeply held beliefs and responds to systemic risks.
- Matthew Bleakley takes a sector perspective and asks what the future of the troubled retail sector means for investors.
- Nikki Matthews returns to one of our core focuses: decision-making, asking whether there is evidence that diverse groups make better investment decisions in difficult times.
- Matt Gibson asks the provocative question: would you trust an asset manager that did no research and outlines some of the challenges to passive management that flow from that simple question.
- We look at some new asset classes and some familiar ones that might be coming back into favour: Rajiv Gogna and I introduce the idea of batteries as an asset class.
- Shyam Gharial explains blended finance, David Garcia recaps the attractions of insurance linked securities, and Kate Jones explains what synthetic equities are and explores whether you can invest in more responsible investment options.