Market Narratives

Ageing populations in the west causing shrinking of the workforce, mismatches in jobs and qualifications, and the rise of new technology is all contributing to the transformation of the labour markets, according to PGIM's latest megatrends report.Participant:• Jakob Wilhelmus, director at PGIM's Thematic Research groupModerator:• Julia Newbould, managing editor at Conexus Financial

Greater access to information from companies and associations on geospatial analysis combined with the acceleration and exponential destruction of the ecosystem has prompted biodiversity to becoming a hot topic in making investment decisions. Conexus Financial managing editor Julia Newbould talks to Newton Investment Management global head of sustainable investment Therese Niklasson 

Our food system needs to be more productive and sustainable with increased demand, changing diets and an outdated production system. According to PGIM thematic research group director Jakob Wilhelmus, there are two main challenges in the food chain right now – our current food system is outdated and secondly the devastating impact on the environment and climate change.

Last year was a terrible year for growth equity investing but 2023 will be a year they can shine, as long as interest rates stabilise, according to Raj Shant, London-based managing director and equity portfolio specialist at Jennison Associates, which is a fundamental equities manager owned by PGIM.

Balanced portfolios will be more volatile without the “natural hedge” provided by a negative correlation between stocks and bonds, but diversification will remain a powerful tool to protect portfolios, according to Noah Weisberger, managing director in the Institutional Advisory & Solutions group at PGIM.

With volatility a strong theme of markets and economies over 2022, some investors have de-risked their portfolios and lost their stomach for riskier emerging markets investments but Alex Khosla, emerging markets and Asia equities portfolio manager at sustainable investment manager Newton Investment Management, argues emerging markets still offer value if you know how to find it. 

The world is experiencing the results of an underinvestment in traditional oil/gas energy infrastructure which was compounded by Covid- 19, when some companies believed that peak oil demand had arrived pulling back even more on investment, then came the Russian invasion of Ukraine, and the disruption is overlaid with the longer-term focus on energy transition. David Winans, principal and credit analyst for PGIM Fixed Income's US investment grade credit research team and Julia Newbould, managing editor, Conexus Financial look at both sides of the demand and supply puzzle.

Tom Nelson, head of thematic equity at Ninety One, talks to Conexus Financial managing editor Julia Newbould about the extent of the shock to energy markets through the Ukraine War and how it will impact the transition to clean energy and how portfolio managers can invest in renewables and achieve carbon zero targets in this volatile market.

A shift towards positive correlation between stocks and bonds is likely, and this phenomenon could persist for many years if history is a guide and this could lead to a “much more volatile world” for those trying to maintain balanced portfolios and may force investors to either raise their risk budgets or lower their return expectations, according to Dr Noah Weisberger, managing director at PGIM IAS group.

Richard Bullock, senior geopolitical strategist at Newton Investment Management and Julia Newbould, managing editor at Conexus Financial talk about today's economic environment. They discuss how it is the time for geopolitical strategists to start using all their tools – there is war in Ukraine and Russia, ongoing tensions between China and Taiwan, a change in world order, a move towards global energy transition and the emergence of a new financial system across various economies – and the outlook is inflation volatility will continue as the world splits into rival camps.

CEO Bernard Reilly and chair Don Luke of Australian Retirement Trust joined us at the Fiduciary Investors Symposium in June 2022 for a fireside chat on how the fund is adapting and progressing post-merger, and what is next on the agenda for Australia's newest mega fund. This session was hosted by Michael Baldwin, global head of external relationships & deputy CEO, Conexus Financial.

In this live recording from the Fiduciary Investors Symposium in June 2022, BHP chief executive, Mike Henry, explores the growing role of mined commodities in the global energy transition. This fireside chat was hosted by Amanda White, director of institutional content, Conexus Financial.

Michelle Teng, vice president and co-head of the private assets research program in PGIM's Institutional Advisory & Solutions (IAS) group, speaks with Julia Newbould, acting editor at Investment Magazine about how climate change and early release schemes can affect super funds and the wider economy.

Junying Shen, vice president and co-head of the private assets research program in the Institutional Advisory & Solutions (IAS) group at PGIM, speaks with Amanda White, editor of Top1000Funds.com (Investment Magazine's sister publication), on how historical performance and cash flow characteristics differ enormously among infrastructure asset sectors.

Private assets are appealing for their attractive risk-return properties and diversification potential not available to investors limited to public markets, but as demand rises for private assets in the search for alpha, liquidity risk has become a growing concern for investors Michelle Teng, vice president of PGIM's Institutional Advisory & Solutions group explains in an interview with Amanda White. Teng argues that funds can closely manage volatility risk in their portfolios and survive periods of short-term volatility, but sustained liquid asset drawdowns are a greater concern and can cause lasting damage to portfolios. 

While many asset allocators might view emerging market debt as volatile and a tactical investment, there's perhaps more strategic value in the asset class than many give it credit for, Aaron Grehan, Aviva Investors deputy head of Emerging Market Debt and hard currency portfolio manager explains in an interview with Matthew Smith. Grehan argues that blending of investment grade and high yield could change the frame of reference for many institutional investors who consider EMD highly volatile to something more defensive.

Technologies that have decimated and transformed the retail and manufacturing sectors are finally 'knocking at the doors' of the services sector, Taimur Hyat, chief operating officer at PGIM explains in an interview with Amanda White. Hyat argues that institutional investors need to build a higher level of technology education within their in-house sector specialist teams to stay ahead of the curve.

Amid increasing allocations to real assets by asset owners and pension funds globally, PGIM's Harsh Parikh puts forward a framework for thinking which encourages funds to tailor their approach to each individual asset and avoid making assumptions by using off the shelf benchmarks and historical averaging. Parikh also puts some numbers around the strengthening interest real assets among asset owners as inflation expectations have also risen. 

In one of the first interviews with David Breach since he became President of Vista Equity Partners, the global investment firm focused exclusively on enterprise software, data and technology-enabled businesses, Investment Magazine managing editor Matthew Smith talks through the ecosystem approach Visa takes to extracting and nurturing value in its portfolio companies. During the interview Breach also uses a local Australian case study to highlight the advantages that can be derived from co-investing with asset owners and he raises the importance of a committed approach to diversity, equality and inclusion for him and Vista's Founder, Chairman & CEO, Robert F. Smith, in the all-pervasive technology sector.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

Emmi aims to help the market to understand the level of carbon risk a specific company faces and the decarbonisation required for that company to remain competitive as the world transitions to a low carbon economy.All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

Australia and gold: The relevance of gold as a strategic asset 2021 - Australia edition | World Gold CouncilBeyond CPI: https://www.gold.org/goldhub/research/beyond-cpi-gold-as-a-strategic-inflation-hedgeMine to Market: https://www.gold.org/goldhub/gold-focus/2021/04/mine-market-golds-untold-storyGold and Crypto: https://www.gold.org/goldhub/research/gold-and-cryptocurrenciesAll views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

Moving Beyond Modern Portfolio Theory: Investing That Matters is co-authored with Professor James Hawley. He is also the co-author of "What They Do With Your Money: How the Financial System Fails Us and How to Fix It" and “The New Capitalists”.All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

Here is Corey's paper mentioned in the podcast: "Liquidity Cascades: The Coordinated Risk of Uncoordinated Market Participants". It can be downloaded here: https://docsend.com/view/cx86pd8yyyea4iswThe other paper mentioned is: “Retail Financial Innovation and Stock Market Dynamics: The Case of Target Date Funds". It can be downloaded here: https://www.nber.org/papers/w28028All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

Jeff Hooke is a broad-based finance and investment executive with global experience throughout the U.S., Europe, and the emerging markets of Latin America and Asia.  He was a Managing Director of Focus Securities, an M&A-oriented boutique investment bank, prior to joining Carey. Earlier, Hooke focused on emerging market investment and private equity.  He was a director at the Emerging Markets Partnership, a $5 billion private equity group. Earlier, he was a Principal Investment Officer of the International Finance Corporation, the $30 billion private sector division of the World Bank.All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

John Cochrane is an American economist specialising in financial economics and macroeconomics. Formerly a professor of economics and finance at the University of Chicago, Cochrane serves as the Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution at Stanford University. Previously John was a Professor of finance at the University of Chicago Booth School of Business and before that at the Department of Economics. He also writes the Grumpy Economist blog.All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

In previous podcasts in this series, we explored how the consolidation of capital flows and migration up the risk-return spectrum by institutional investors contributes to systematic risk. In this podcast, we explore the potential for institutional asset owners and allocators to redesign their asset allocation strategies to allow for more regenerative investment structures while still achieving targeted rates of return. We will also explore adjustments to investment practices that can enable a redesign of asset allocation, including benchmarking practices, team incentives and performance reviews, valuation methodologies, and risk management techniques. References: Background on the Taylor Guitars deal: https://www.newswire.ca/news-releases/taylor-guitars-transitions-to-100-employee-ownership-with-support-from-the-healthcare-of-ontario-pension-plan-hoopp-and-social-capital-partners-scp--857853786.html Link to the Predistribution Initiative paper, ESG 2.0: Measuring & Managing Investor Risks Beyond the Enterprise Level Link to Beyond Modern Portfolio Theory: Investing that Matters by Jon Lukomnik and Jim Hawley (the 75-94% range of estimated returns from systematic factors) Link to Aunnie Patton Power's book, Adventure Finance, which covers regenerative investment structures such as revenue based financing, equity redemptions, and other ways to have "structured exits." We plan to do a webinar with Aunnie on July 14th 2021 at 11am ET, and details including registration will be on our website. New Yorker article on VC and how it can be "deforming capitalism" All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

Alfonso is a passionate global macro investor offering a 10 000 foot view of the macro and market landscape. All opinions in this podcast and his substack are strictly his own and not financial advice.  Alfonso's newsletter -> themacrocompass.substack.comAlfonso's twitter account -> https://twitter.com/MacroAlfCentral Banks don't print money and you've been paying a tax on your savings for years already - negative real interest rates.All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

Scott joined Frontier from Cbus Super where he was the fund's Senior Portfolio Manager of Absolute Return Strategies. He has extensive experience in derivatives management and was previously a part of Vanguard's global investment strategy group, leading research across a range of investment topics. He also has an academic background having lectured at Griffith University in Portfolio Management and Corporate Finance where he completed a PhD in Finance.All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

This episode explores the impact of institutional investors moving up the risk-return spectrum into higher-risk asset classes – such as leveraged buyout private equity, high yield bonds, leveraged loans, collateralized loan obligations, and venture capital. However, with huge sums of capital flowing into these asset classes, there is a rising concern about weakening underwriting standards, high levels of global indebtedness, a divergence from fundamentals, and risks of bubbles and defaults. From an ESG perspective, many would argue it is not just investors who take the risk with these structures. Companies with highly leveraged capital structures may need to cut costs relating to the quality and affordability of goods and services or quality jobs to service debt or entirely restructure – shifting unwelcome and uncompensated risk to workers and communities. Moreover, as institutional investors grow in size, there is a risk that efforts to allocate capital efficiently (e.g. to larger fund managers) may inadvertently contribute to both fund manager and corporate consolidation, thereby further reducing diversification and opportunity in the real economy and market. This session will also explore how such investment practices can contribute to systematic risks for Universal Owners and reduced chances of returning to normalised interest rates. All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

Better than Alpha: Three Steps to Capturing Excess Returns in a Changing WorldThe concept of beating markets is just a lot of hype. Successful investors don't find “alpha,” they find value―and that's what this book helps you do. Better Than Alpha provides the perspective, insights, and tools you need to retrain your focus away from searching for alpha and toward actions that produce superior investment outcomes. https://www.amazon.com/Better-than-Alpha-Capturing-Changing/dp/1264257651All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

James Kosmatos is currently an independent investment analyst working full time within the cryptocurrency industry, focusing on fundamental analysis of cryptocurrencies within the Decentralised Finance (DeFi) sector. James has been researching and investing in this asset class since early 2017; he has recently started his current role after seeing the significant growth and innovation of technology being implemented within the DeFi sector. James previously worked at Frontier within the consulting and debt research team, providing advice on portfolio construction, asset class configuration and fund manager due diligence for various institutional investors. Before Frontier, James worked within PwC Wealth Services, assisting high net worth families with portfolio construction, fund manager due diligence and implementation. Recommended reading: "DeFi Beyond the Hype"; An overview of Defi with case studies comparing projects with traditional financial services and real-world financial market structures. https://wifpr.wharton.upenn.edu/wp-content/uploads/2021/05/DeFi-Beyond-the-Hype.pdfAll views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

This episode explores how the market structure has changed over the past decades to become more institutionalised. While institutional investors have been able to take advantage of their size to negotiate improved corporate governance reforms from companies, they are also under pressure to efficiently deploy large sums of capital, contributing to asset manager consolidation and, therefore, corporate consolidation. Such consolidation can have several negative impacts, such as squeezing out diverse and emerging fund managers and SMEs, monopsony dynamics, reduced innovation, and erosion of the quality and affordability of goods and services, and poor investment diversification opportunity, which in turn contributes to procyclical investment behaviour and increased systematic risk. The episode concludes with ideas for how institutional investors can de-consolidate their capital flows to contribute to a healthier real economy and market.All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

At U Ethical, Désirée leads the evolution of the ethical investment framework and active engagement with investee companies, in collaboration with U Ethical’s investment team, key stakeholders and industry peers. Since 1985, U Ethical has developed a reputation for unwavering commitment to ethics-driven performance while contributing the majority of operating surplus to social justice advocacy and community programs. As a certified B Corporation, U Ethical views clients as partners on important ethical matters and does not shy away from holding companies to account for controversial issuesAll views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

All views expressed on this podcast are subject to change and do not necessarily reflect the views of Conexus Financial. This podcast is for educational purposes only and should not be relied upon as investment advice.

In episode 86, Alex Proimos speaks with Rich Nuzum, president of Mercer’s Investments & Retirement business. This episode discusses the concerns influencing global investors. We explore the issues of low long-term real interest rates, demographics, water security, geopolitics and climate change and how can fiduciaries price and incorporate these concerns into their portfolio construction. We also discuss the current market structure, the preference for private assets and the allocation of capital and the challenges of being a long term investor during heightened periods of uncertainty.