Kuala Lumpur – Manulife Investment Management today released Global Intelligence - its semi-annual report featuring firmwide analysis and perspectives from its global investment teams. The report takes a detailed look at multiple scenarios that in previous economic cycles would serve as outliers, but when taken together paint a picture of a challenging global investment landscape where historically accepted norms have been upended.
“We are excited to share the latest Global Intelligence report and bring our investment teams’ expertise and capabilities to our clients,” said Paul Lorentz, president and CEO, Manulife Investment Management. “The report serves to build confidence in positioning a resilient portfolio – especially during times of extraordinary challenges.”
With rising geopolitical tension and extended periods of market uncertainty, hopes for a period of normalcy coming out of the COVID-19 pandemic faded over the past year. Against this backdrop, the report explores the breakdown of historic stock/bond correlations, raises questions about the perceived stability of the U.S. banking system, analyzes the role governments must play to spur increased investment in nature, and assesses the value set of alternative asset classes, among other topics, through the lens of identifying opportunities to strengthen resilience against future challenges.
“The topics we explore in the report highlight the extent to which the accepted norms that helped guide investment decisions for years are being challenged,” said Colin Fitzgerald, global head of institutional, Manulife Investment Management. “There is no established playbook for this fast-moving global macro environment, and building resilient portfolios requires a deft hand to apply lessons learned in real time to take advantage of opportunities for growth.”
Global Intelligence analyzes the following themes across regions and asset classes:
The pause before the pivot: positioning fixed-income allocations for an evolving policy landscape – Chris Chapman, CFA, head of global multi-sector fixed income, provides fresh data to accompany a historical look at the longstanding challenge investors face to find an adequate balance between risk and yield in fixed-income investments. Given the current rate-hike cycle there are challenges for today’s fixed-income investors due to the potential of sharp reversal of central bank policy and the macroeconomic vulnerabilities it may create.
Will U.S. banking woes accelerate the shift to a fragmented global economy? – Sue Trinh, head of macro strategy, Asia, multi-asset solutions, analyses the introduction of the Bank Term Funding Program in the wake of the regional banking crisis and the extent to which it may create an unlevel playing field for financial institutions. Sue outlines the implications for global capital markets if the program is made permanent, including its potential to usher in the next phase of deglobalization with the weaponization of USD liquidity as a possible outcome.
Valuing nature after COP15: systems, policy, action - Brian J. Kernohan, chief sustainability officer, private markets, and Peter Mennie, chief sustainable investment officer, public markets, explore the steps needed to scale sustainable investment following the agreed-upon Global Biodiversity Framework (GBF), which established a clear trajectory for governments globally post COP15. They argue that the onus is on nations to design regulatory and legal frameworks consistent with the GBF to more accurately value nature and reward investments in nature while discouraging actions that damage it.
Private equity secondaries are meeting the moment – Today’s macroeconomic uncertainty and a growing need for liquidity are driving record secondary market activity. Jeff Hammer and Paul Sanabria, global co-heads of secondaries, explain why secondaries now represent an undercapitalized market opportunity for those who know what to look for and offer principles to help secondary investors boost their odds of success.
Five factors influencing the effectiveness of a 60/40 portfolio – Traditional balanced portfolios came under fire last year when stock/bond correlations surged. Members of the multi-asset solutions team, including Frances Donald, global chief economist and strategist, Alex Grassino, head of macro strategy, North America, Geoff Kelley, CFA, global head of strategic asset allocation, and Nathan Thooft, chief investment officer, look through the historical data to identify the macroeconomic conditions under which the effectiveness of a 60/40 portfolio may be challenged. Their analysis provides a useful guide for investors looking to better understand portfolio resilience over market cycles.
Family structural change and retirement security in Asia – Retirement security in Asia is affected by more than its aging populations; the region’s traditional family support structure is changing as well. Calvin Chiu, head of Asia retirement, and Elvin Tharm, head of retirement, proposition, strategy and transformation, have partnered with the Sau Po Centre on Ageing at The University of Hong Kong, to look at family structures across Hong Kong, Indonesia, Malaysia, and Taiwan. Calvin and Elvin highlight how the evolution of the traditional family structure has complicated the financial picture for modern-day families and the steps retirement savers can take to mitigate the impact.
Additional information, including the full Global Intelligence report, is available online.
