Out with the old, in with the new

A new year has begun, and it’s already looking even more unpredictable than 2020.

Violent protests have rocked the US Capitol as President Elect Joe Biden prepares to take office in two weeks’ time; the UK’s transition period for leaving the EU has ended with a last-minute deal that barely addressed the country’s large financial services sector; and a surge in Bitcoin has sent the value of the cryptocurrency market above USD1 trillion for the first time.

Asset managers are realising the need to throw out old-world preconceptions in 2021. Among them is US-based global equity manager GQG Partners, whose principals say that a culture of being willing to adapt and challenge their beliefs was what allowed them to double the firm’s assets under management during 2020.

GQG’s CEO and Managing Director spoke to Institutional Asset Manager about why investing rigidly according to a “style” like growth or value has become outdated, about the art of ‘devil’s advocacy’ in asset management, and about pandemic-proofing the group’s workforce.

Shaking up old norms in the investment industry also means asset managers will increasingly be held to account for a lack of gender and ethnic diversity. Institutional investors are increasing their requests for information on the make-up of managers’ investment teams, and a group of leading consultants in the industry have launched a new action group to improve transparency around diversity.

Meanwhile, a monetary and fiscal policy “revolution” is underway – according to BlackRock – as central banks commit to ‘lower for longer’ after slashing interest rates and bulk-buying bonds became the norm in response to the coronavirus pandemic. Even the Federal Reserve has said it would allow US inflation to exceed its 2 per cent target without hiking rates.

The world’s largest asset manager has responded by underweighting government bonds as it predicts real yields will fall even further if inflation is allowed to rise.



Madeleine Taylor
Editor, Institutional Asset Manager

 

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