THE CENTRED INVESTOR

The Centred Investor is CII’s annual publication, outlining the key themes set to impact institutional investors over the next twelve months. All copies are archived here and are entirely free to download.

 
 

CENTRED INVESTOR ISSUE 11

The essence of investing is to take economic exposure to what the future may bring. We are living in a rapidly changing world and there are a number of key forces driving that change across technology, politics, business and science, having an impact on societies and economies (and investing). Within each of these fields there are leaders that symbolise the many faces of change shaping our future.

There are direct implications for those in the investment industry managing large pools of capital for the provision of retirement benefits of members and stakeholders. With governments around the world lifting the pension age in response to increased longevity and the growing budgetary pressures of financing pensions, it is important to think about the implications of scientific breakthroughs that could extend life by 20, 30, 50 or even a 100 years.

 
 

CENTRED INVESTOR ISSUE 10

Investor sentiment has shifted and CII’s delegates agree that Europe offers the greatest investment opportunities over the next three years. It is time for investors to wipe away the tears and focus on the opportunities in front of them.

Investors are taking a fresh look at Europe and there are four forces at play creating a new sense of optimism. First, positive economic data shows that the trend is your friend. While not outstanding by global comparison the trend in European GDP growth, unemployment and productivity are clearly positive and more stable than at any time over the past decade. While there are vast differences across European nations the fact is that aggregate economic performance offers the strongest outlook since the financial crisis.

 
 

centred investor issue 9

In today’s rapidly changing and uncertain economic environment, it is more important than ever to be innovative in how we manage portfolios in pursuit of returns; how we manage and immunise portfolios against downside and tail risks; and how we manage people and organisational structures to enable us
to successfully navigate the increasingly complex investment landscape we face.

In 2017 we will take CII’s International Investing Symposium to Washington D.C. where the event will be held at the infamous Watergate Hotel. By April 2017 we will be three months into the term of the new President (Inauguration Day is 20 January) and domestic and foreign policy agendas will be becoming evident.

 
 

Centred investor issue 8

CII is celebrating its 20th year in 2016. Having been part of our industry for the past two decades, CII has witnessed firsthand the changes that have occurred, with the industry having professionalised rapidly in terms of leadership, organisational capability, corporate strategy and investment expertise. Over the same timeframe, financial markets and the global economy have undergone a steady evolution and endured periods of seismic dislocation.

The challenges and opportunities in global investment, risk management and product development have become broader and more complex and in response investors have deepened their in-house expertise. To ensure we remain relevant and add value to investors, we have refocused our program with the objective of creating an unparalleled platform for knowledge sharing.

 
 

Centred investor issue 7

With tensions running high between the European Union and the Kremlin, especially in the wake of the outbreak of violence in the Ukraine, there is growing concern in the West about the onset of a new Cold War brought about by changing economic spheres of influence. Russia’s growing economic might has led many in Europe to conclude that their eastern neighbour is more powerful now than ever before. Russia is slowly gaining sway over parts of Central and Eastern Europe, even amongst European Union member states like Hungary, through a series of trade negotiations and political agreements. Whispers of growing political and military influence over Estonia have further worsened fears that Russia is intent on re-establishing itself as a superpower using Cold War tactics, given that Estonia is a NATO member country and has been an independent nation since the fall of the Soviet Union.

The seventh edition of the Centred Investor looks at the resurgence of tensions between Russia and the West, and the implications for Central and Eastern Europe. As countries and companies consider their next move, investors also need to consider how to be positioned in this high stakes game of chess.

 
 

Centred investor issue 6

A lot can be learnt from Turkey through the time elapsed between the fall of the Ottoman Empire and its comeback post GFC. The contributors to this edition of the Centred Investor share their opinions and perspectives with respect to: the structural changes driving growth in emerging markets and the potential for superior returns from a myriad of factors that can be exploited across global markets; the related currency risk investors face in making efforts to overcome domestic biases in portfolios; and an alternative to the post-retirement dilemma that Australian superannuation are currently facing.

The sixth edition of the Centred Investor looks at the strategic location of Turkey as the connection between the East and the West. The focus on Peripheral Europe is growing as the European Union tentatively emerges out of a crisis and embarks on its long road to recovery.

 
 

Centred investor issue 5

Since hitting a high of 15.8% in September 1980, the yield on 10-year US government bonds has been downward trending for the past three decades.

Today the 10-year US government bond yield is at ~1.68%. This scenario is broadly representative of interest rates globally and has benefited fixed income portfolios as a result of bond values rising. However, with little room for interest rates to fall further, fixed income managers are facing the prospect of interest rates rising inevitably. While many are considering alternatives, such as infrastructure and real estate as a substitute to generating yield to help match liabilities whilst hedging inflation risk, fixed income assets are likely to continue to make up a material portion of institutional portfolios.

Contributors to the Centred Investor share their thoughts and investment strategies across the asset class and provide insights as to how fixed income portfolios can be managed better under this environment.

 
 

Centred investor issue 4

Comparing Japan’s economy of the last two decades and the challenges it faces today to that of western economies, there are some parallels that can be drawn. An aging population, a low interest rate environment, subdued growth, high sovereign indebtedness, quantitative easing intervention and political gridlock are some of the key similarities affecting investment markets, investor sentiment and, in turn, the ability of institutional investors to meet their investment objectives.

Contributors to this edition of the Centred Investor share their thoughts on: the “Japanisation” of the West and how learning from history can help the West avoid a similar fate to that endured by Japan over the last two decades; how activism can be used as part of the wider investment strategy to add value and alpha; and finally, as investors seek out the higher growth environment of emerging markets, understanding the drivers of emerging market equity performance.

 
 

CENTRED InvestoR ISSUE 3

Demographic shifts, urbanisation, technological innovation and environmental trends, coupled with historically low global growth are some of the external factors providing challenges for institutional investors. Meanwhile, superannuation fund members are demanding better risk adjusted returns.

This confluence of events is occurring in parallel to a rapidly evolving regulatory regime, aiming to encourage best practice amongst industry participants. Consequently, superannuation funds are under significant pressure to evolve their organisational structures to improve their efficiency and competitiveness.

In view of this backdrop and the challenges the industry faces, the third edition of the Centred Investor explores various facets of competition across the superannuation industry and the path the industry as a whole, and at the fund level, can take to “rise above the herd” and better achieve goals held out to members.

 
 

CENTRED InvestoR ISSUE 2

In light of the intensifying sovereign debt crisis in the West and its ramifications on global capital markets and economies alike, CII believe it is of value to revisit the structure of Australian capital markets and the role of superannuation funds there within. Australia’s financial system has proven robust throughout the Global Financial Crisis (GFC). However, its dependence upon international debt capital markets for funding is a cause of concern in the current macroeconomic environment.

Superannuation funds have taken their place as a significant player in the financial services industry, a position which will grow and strengthen with time. To take full advantage of the opportunities presented by the macroeconomic environment will require outside the box thinking and strong leadership as Super Emerges: A New Pillar of the Financial System.

 
 

CENTRED InvestoR ISSUE 1

We are pleased to present this first edition of the Centred Investor, a publication for and about the Institutional Investor. This edition details a comprehensive look at the core themes we have identified throughout 2011, as they are likely to be most significant for the industry over the coming years.

2011 has seen economies and financial markets around the world experience significant volatility and ongoing levels of uncertainty, with profound effects on member outcomes. In combating the relentless macroeconomic environment, the superannuation industry is undergoing significant change in seeking to ensure best practice management of members’ assets. A drive towards increased consolidation and an intensified regulatory environment has ensued.

This edition of the Centred Investor delves into CII’s 2012 investment forum program and dissects the key themes that will be addressed, explaining the rationale behind why we believe these are the most pressing issues the industry faces, in a bid to help facilitate best practice management of funds in today’s dynamic operating environment. We trust that you find the publication of interest.