Has market volatility caused investors to tolerate depreciation or withdraw from equities in 2022?
December 2022 – The severe downturns experienced in 2022 have left equity managers having to explain to investors the longer-term benefits of a consistent process with equity portfolios, as opposed to simply pulling out.
CAMRADATA’s latest whitepaper, Global Equity considers investor trends and what the future risks and opportunities are for quality and growth in equity portfolios.
It also includes insights from firms including Artemis, Guinness Global Investors, Sanlam Investments, Aon, bfinance, isio, SEI Investments and XPS Investment who all attended a roundtable recently hosted by CAMRADATA.
The report begins by defining the role of global equities within asset owners’ portfolios, and the challenges ahead including if equities still have further to fall. It also discusses different investment styles and strategies and considers if rising interest rates or inflation are the biggest threats.
The report then looks beyond any major recession and considers how investors can position themselves for a rebound, which companies could thrive, before ending with a discussion around ESG. It was pointed out that the real challenge ahead is defining what managers, clients and regulators actually mean by the term ESG.
Natasha Silva, Managing Director, Client Relations, CAMRADATA said, “Most clients of asset managers acknowledge the difficulty of market timing, but this year many participated in market timing by pulling out of liquid risk assets such as equities. The withdrawal is understandable but usually emotional, with no disciplined rationale for either the exit or a future return.
“At such times, equity managers are left explaining why their process will carry on functioning well enough when market sentiment is negative, interest rates are rising and inflation persists. It is hard for any manager today to refer to earlier periods of their career when they succeeded through similar conditions, but they can refer to consistency of process.
“This might manifest itself in short-term volatility, but institutional investors ought to recognise the longer-term benefits of a consistent process. Our whitepaper endeavours to find out whether asset owners have tolerated depreciation of their equity portfolios this year; or decided to indulge in market-timing.”
The whitepaper also includes three opinion articles from the sponsors:
- Artemis – ‘Survive inflation by balancing your portfolio’
- Guinness Global Investors – ‘How global equity income can help investors in an inflationary environment’
- Sanlam Investments – ‘Plus Ca Change, Plus C’est La Meme Chose: The more things change, the more they stay the same’
To read the Global Equity whitepaper, please click here.