Today’s M&G’s 16th Annual Investment Forum could hardly be happening at a more challenging time for investors. With concerns about inflation, global economic growth, the impacts of the Covid-19 pandemic, and of course the devastating war in Ukraine firmly on our minds, it was a good time to hear the perspectives and opinions from a range of M&Gs CIOs and fund managers at the gathering today which was held both face to face and online.
Kicking off the formal proceedings with their CIO outlook, Fabiana Fedeli, CIO of M&G’s Equities and Multi Asset divisions and Stefan Isaacs, Deputy CIO Public Fixed Income, discussed what might lie ahead for financial markets in the second half of the year. They highlighted potential opportunities and of course the challenges in the context of the uncertain international environment we face with consumer behaviours and global leading indicators trending downwards. Fabiana’s message regarding where markets currently sit is that the heavy lifting of the sell off may be behind us but the risk is still to the downside. She also highlighted data to back up her belief that equities are still optically inexpensive versus bonds. When positioning in a volatile environment, her approach is to be selective, stay diversified and focus on long term themes. Stefan then shared his reasons why he is ‘cautiously optimistic’ about the prospects for fixed income, despite the obvious challenges including risks of China underperforming.
Carl Vine is Co-Head of Asian Investment at M&G. In his session, he was in positive mood about Japanese equities, stressing that there are signs that Japanese corporates are becoming much more shareholder friendly. He believes that this presents an opportunity for investors who are willing to engage and fully understand Japanese business models. His belief extends to him suggesting that Japanese earnings suggest a double digit compound return opportunity and that corporate reform trends are ideal for engagement orientated stock pickers. Bold talk indeed!
Infrastructure – where’s the value?
In the first break out session, fund manager, Alex Araujo, shared his views on what the next generation of infrastructure might look like. As an expert in the sector and someone who is clearly deeply engaged with its inner workings, he reminded attendees that infrastructure is a beneficiary of long-term structural trends, such as renewable energy, clean transportation and digital connectivity. These are powerful themes which Araujo and his team believe will endure for many decades to come. He shared his view as to how the current tailwinds could provide a wide array of compelling investment opportunities for long-term investors, as well as the potential for reliable dividend growth ahead of G7 inflation. His examples of recent takeover activity around some of his fund’s holdings went to prove the point in practice as did his highlights of multi decade trends within the asset class highlighting the long term value.
Investing for impact
The session on investing for impact without compromising on investment performance was of particular interest. M&G’s Positive Impact team members, John William Olsen – Fund manager, Ben Constable-Maxwell – Head of Sustainable and Impact Investing, Jasveet Brar – Fund Manager and Randeep Somel – Fund manager, have been trailblazers in the field of impact investing for many years. Today, they combined to share their views on how they approach delivering positive impact for society and the environment without compromising risk adjusted returns.
The fixed income debate
And rounding off the event, fixed income investing is a particular challenge in an inflationary environment such as we have today. Richard Woolnough is one fixed income fund manager who’s very well known for his depth of experience investing in the sector. In his session, given his thinking that with UK inflation expected to remain elevated for an extended period, he highlighted some of the fixed income strategies that could be employed to help mitigate a more persistent inflationary environment.