Our Chief Investment Office and experts share insights into our house view and macro trends.
With large companies wising up to the importance of adopting and promoting sustainable business practices – and with the influence, affluence and expectations of Millennials set to peak over the next decade – our guest contributor Will Oulton, Global Head, Responsible Investment, First State Investments, considers the impact on the investment industry, and the increasing need to balance social and environmental responsibility with positive financial performance.
At the start of this year we predicted 2018 to be bumpier than 2017, (which could scarcely have been smoother, with volatility measures at all-time lows during the year), and so it is proving. However, we also thought that the investment climate would still be favourable for risk assets like shares (or equities/stocks). We based this view on robust economic growth across the globe, a boost to earnings from US tax reform, rising corporate profits and the continuing gift from central banks of decent liquidity, even with quantitative tightening from the Federal Reserve, and very low, albeit slightly rising interest rates.
There has been a significant growth and interest in investing on a responsible basis and the area is continually evolving. However, for investors, traditional ‘ethical’ investment solutions have tended to leave a limited choice of companies to invest in, compromising diversification and therefore investment risk/returns. ESG (environmental, social and governance) investing allows investors to take a proactive approach to investing responsibly but not at the expense of their risk/returns.
Against this backdrop, Michel Perera, Chief Investment Officer provides an update.
Very little has fundamentally changed since the beginning of the year yet the markets are behaving as if we have moved to a different phase in the economic cycle. The reasons are simple: a potential trade war and concerns that we are nearing the end of one of the longest bull markets on record. These are both hampering confidence and the recent technical market correction (market fall) has spawned some fundamental worries.
Some might think 'emerging market technology' is an oxymoron, but the picture of emerging markets (EM) as commodity exporters and cheap factories is outdated. This article reveals how EM have developed technologically beyond recognition, and why this should be reflected in investment portfolios.
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IMPORTANT: Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance.