Investors need to be clear on their time frames, prepared for more ‘business as unusual’ and positioned for climate change — all of which requires a clear understanding of how related risks and opportunities could develop over time. In this session, we outline these themes and discuss the potential opportunities and risks investors should take into account in order to succeed over the next few years.

The UN is labelling this the “decade of delivery”, when we respond to the science-based warnings and implement “a better and more sustainable future for all”. There is debate around the timing, methodology and portfolio implications for different “transition” approaches, but the starting point is generally agreed: the energy sector. Energy fuels so much of our economy, and it is now facing the greatest disruption. So where are the known risks and where might the surprises lie? How can we successfully connect the risks with the opportunities? A successful transition in the decade ahead will require navigating both and finding the investable solutions across asset classes.

At near-zero yields, hedging strategies may underperform liabilities and be less effective than intended. Furthermore, the balance between rates and inflation hedging may no longer be appropriate. This market environment could persist for many years, and periods of negative yields cannot be ruled out. The next 10 years are critical for defined benefit schemes. Investors should understand how to manage their keys risks in this environment. 

In this session, we explore the issues with liability hedging at near-zero yields and offer insights into how investors should construct risk-efficient liability-hedging mandates in this environment.

2020 has not only seen the acceleration of a number of significant themes due to the coronavirus pandemic, but it has also been witness to an unprecedented level of social unrest. The geopolitical landscape is as complex and fragile as ever, and the spectre of protectionism winning out over globalisation remains. Personality politics continue to dominate the global stage. But will that be enough to get economies back on track after COVID-19? 

Our keynote speaker, Geoff Mulgan, in conversation with our UK CIO, Jo Holden, shares his views on the current political environment and the key social and economic themes dominating the global stage.

Although defined benefit (DB) pension schemes can and do invest in illiquid asset classes, defined contribution (DC) schemes in the UK have relatively little exposure. Our panellists share their experiences of DC schemes that have invested, or have considered investing, in private markets. They debate whether the investment merits outweigh the additional costs as well as operational and risk considerations.

In this session, we talk to three panellists about their experiences of investing in a variety of credit strategies to fulfil their strategic objectives. We discuss some of the benefits and challenges associated with investing in less-liquid credit strategies, as well as the challenges of integrating environmental, social and governance considerations into credit exposures.

Value investing has had a torrid time for many years, with value stocks significantly underperforming growth stocks over the past decade. Taking the perspective of an asset owner, we consider whether value investing has a place in a post-COVID-19 world focussed on technological development and climate transition against a backdrop of persistent low interest rates. In short, is value dead? Or have the rumours of its death been greatly exaggerated?

For years, the debate has raged on: active or passive? As passive options have evolved, perhaps it is time for active to throw in the towel. Or is it? In this session, Andrew MacDougall will referee as Jonathan Marshall and Suzanne Lubbe climb into the ring. They will address some of the key aspects of the debate, bringing a more practical perspective to the bout, as well as sharing some pointers on how your portfolio can roll with the punches.

We often find minimal attention is given to currency positioning in asset allocation discussions. Investors may take the view that currencies are too hard to call, or that the long-term impact will be minimal, and choose to adopt a “neutral” position.

In our recent research, we have concluded that currency decisions deserve greater attention. To us, it is not even obvious what a “neutral” position is — so to have no view is not an option.  We have considered the impact of currency on risk and return — and how this has changed over time for sterling-based investors.

In this session, we discuss these issues, we challenge received wisdom on currency positioning decisions, and we implore investors not to sweep currency under the carpet.

Recent years have seen an increased interest in sustainable or ESG strategies. Initial interest was driven by a focus on the environment, specifically climate change. The second area of ESG that has come to the fore in the COVID-19 crisis is the “S” — the social aspect of corporate governance — such as labour rights. 

One of Joseph Rowntree Foundation’s (JRF’s) key priorities is helping people find a route out of poverty through work. The issue of good work, and what this looks like, is a particular focus for them at the moment. This discussion between Lucy Tusa of Mercer and Tracey Preece, Director of Finance at JRF, looks at how JRF engages with fund managers on this issue and shows how they are moving to an alignment of purpose and financial investments that go beyond traditional ESG.

The first quarter of 2020 was a period of extreme market volatility and asset drawdowns. Trustees and scheme managers have had to respond quickly to help protect funding levels, and risk-management processes have been put to the test. In addition, the amount of regulatory disclosure for asset owners is increasing, requiring trustees and scheme managers to dedicate more time and resources to ensure compliance and to provide information helpful to their scheme members. In this session, two chief investment officers from UK pension schemes talk about their current investment priorities, share the lessons learnt this year and discuss how they are addressing the additional disclosure requirements.