XxX | Feature Contents Editorial
60/40: END OF AN ERA
We are living in unprecedented times. Times when conventional investment theory is being tested.
Students of finance are taught that when equity markets rise, bond markets fall. And when bond markets rise, equity markets fall. Well, this year that has not happened. In the year to date, the FTSE All World index has fallen 14.2%, while the Bloomberg Global Aggregate Bond index has slumped 11%. In previous periods, the bond index would have moved higher as investors sought the safety of listed debt if volatility hit equities. But 2022 is no ordinary year.
The impact of the lockdowns, and the disruption to supply chains which followed, have hit the global economy hard. This has led to inflation hitting multi-decade highs in the UK and US, while Russia’s invasion of Ukraine has put even more pressure on energy and food prices.
Then there are the central banks. After bailing their economies out during the financial crisis, many have adopted a tighter policy. The result is that some believe the 60% equities, 40% bonds strategy that many insti- tutional investors employ is no longer effective in providing growth and offering pro- tection against volatility.
That might be right as the markets have been largely calm since the financial crisis, but some of the people we spoke to for this month’s cover story believe that the demise of the 60/40 strategy has been greatly exaggerated. Read why from page 16. This edition also takes a look at the social pillar of ESG. It was once about protecting indigenous populations but has since evolved to tackle issues such as diversity and inequality. From page 22, we look at what’s next for the S in ESG. And ESG was the theme of the conference portfolio institutional hosted during the sum- mer. Members of our ESG club took the stage with pension schemes and insurers to discuss topics such as a just transition, biodiversity and sustainable lending. Our cov- erage of the event starts on page 32. We also put Japan under the microscope. Its central bank has pulled away from the crowd by not opting for a tighter policy which is creating opportunity for investors. We look at where from page 50. Finally, Nest’s deputy chief investment officer Liz Fernando talks to us about why she no longer reads statements at 7am and what’s it like having to invest £400m a month. Read all about it from page 12.
Mark Dunne Editor
m.dunne@portfolio-institutional.co.uk
Issue 116 | September 2022 | portfolio institutional | 3
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60
