When things don’t go as planned

Pardon the Interruption

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June was the month when things didn’t go as planned.  The anticipated 100 seat conservative majority vanished in the weeks running up to the 8th of June, and we ended up with a Hung Parliament.  Theresa May has now patched up a ‘Confidence and Supply’ agreement with the DUP, but the minority government will make it even more difficult to navigate the negotiations and legislative requirements to make Brexit a reality.

Volatility also returned, and slumping leading indicators have put risk firmly back on the agenda. It is no wonder that half of the top 10 search terms from the mallowstreet community were related to ‘risk’, as pension funds try and navigate these choppy waters and uncertain economic outlook:

Top 10 Searches in June

  1. Currency Hedging
  2. Property
  3. FCA Consultation
  4. Alternative Income
  5. Duration Risk
  6. Equities
  7. Funding
  8. Infrastructure
  9. Election
  10. Volatility

A recent survey we conducted showed 90% of respondents are either retaining existing allocations to emerging markets (EM) or increasing them, whilst only 2.5% are decreasing them and 7.5% still have no allocations. But what should they be looking for both in terms of investment opportunities and the underlying factors driving them? 

The mallowstreet Emerging Markets Drive In gave a broad overview of many of the key issues. There are clear bullish arguments for EM both at the macro-economic level and at the security selection level. The masterclass presenters at the Drive In applied them in different ways to different asset classes within the emerging market universe.   You can read the full discussion here.

It is clear that there are many opportunities out there.  But in a world where things don’t go as planned, what should trustees be doing, and how should pension funds be refining their investment strategies? These are just a few topics that we will start to unpack on mallowstreet.com.  Join the discussion today!

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