Tectonic shifts favour active managers
Tectonic economic shifts, which include extreme monetary policy as well as a technology and communication revolution, are expected to dominate the global macro-economic picture, while increasing market volatility and impacting long-term investment opportunities, according to SG Hiscock & Company.
According to Hamish Tadgell, portfolio manager at SG Hiscock & Company for the SGH20 Fund, the impact of excess liquidity would additionally continue to create a massive distortion in financial versus real economy prices.
“Following on from this, the distortion is sharpening the sting of inequality. We believe we are in a new phase of what we call the ‘war on inequality,’ which is characterised by rising popularism, regulation and redistribution,” he said.
“Thirdly, we are experiencing the rise of China and a change in world order.”
Tadgell also said the firm believed that trade tensions would be of a more permanent nature, akin to the US-Sino relations in the 1970-80s when Japan emerged as an economic super power.
“Against these seismic trends, central banks are now on an exit path from quantitative easing, adding to the risk of higher rates and volatility,” he added.
“In our view, taking a high-conviction active approach to investing in companies well positioned in attractive end markets, and that have engaged and focused leadership, is vital.”
The firm also identified five investment themes, which included “technology everywhere,” changing consumption patterns, ageing population, low carbon economy and urbanization.
According to Tadgell, the firm’s investment approach was based on identifying attractive industry themes, which provided tailwinds, and finding attractive businesses within those industries.
AUTHOR
Oksana Patron
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