When it comes to key investment trends, Victorian Funds Management Corporation CEO Lisa Gray certainly knows her stuff. In a recent conversation with The CEO Magazine, she shared four interesting dynamics which, although not necessarily new, have been amplified by recent events.
Top investment trends 2021
- Lower for longer
“Whether it’s fixed interest returns or different types of capital market conditions such as inflation, there’s a whole global macro-economic outlook of things that will be lower for a longer period of time.
“What that means as an investor is that we have to adjust our performance to still try and deliver to clients’ long-term objectives and their long-term investment performance.
“Our clients are facing challenges in their businesses as well because of COVID, so we have to work with them to adapt, and it’s about continuing to build that resilience and adapting our portfolios.”
- Data-driven decisions
“Using data and analytics for faster and better decision-making will be the second investment trend. Global fund managers are doing this and will continue to build those capabilities, but COVID again puts a particular spotlight on it.
“If you think about during 2020, and now as well in capital markets, how governments have responded has been quite unconventional in terms of their rapid policy response to prop up economies.
“We are seeing extremely low interest rates if not negative, low inflation. These are all very different circumstances all happening at the one time, so that means you’ve got to be digesting information at very high speeds and from multiple sources that typically investors haven’t needed to do in the past.”
- A holistic approach
“More and more investors are now looking at whole of portfolio for how they look at their asset allocation and how they construct and allocate capital. For us also, it was clear we needed to shift from the individual asset classes to looking at whole of portfolio. That means we look at allocating our capital differently.
“We’re not just looking at what’s happening in infrastructure, for example, but if something is happening, what does it mean for infrastructure equities and how all of those things come together? Data and analytics is key to that. But it’s also about a different mindset when looking at things and how they impact the whole portfolio. So, there’s a cultural underpinning to it as well.”
- Investments stewardship
“As an investor, or an asset manager, we are a steward of capital and that ultimately means we have to invest that appropriately. That means we have had to become stewards of sustainability and sustainable businesses.
“If you go back five or 10 years, people were talking about environmental, social and governance (ESG), but it was still very much on the fringe of investment decision-making. Whereas now, investors such as ourselves are very much behaving as investment stewards with ESG and other factors very much integrated into how we’re making investment decisions. That was definitely amplified through COVID.”