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Investors can’t afford to ignore meta-trends: Oppenheimer Generations
What constitutes long-term investment is different for almost everybody. For an options trader, a year is an eternity; for a sovereign wealth fund it’s the blink of an eye. And for a family office it might be even less, according to Edoardo Collevecchio, managing director of the Asia division of Oppenheimer Generations, which represents the interests of South African billionaires Nicky and Jonathan Oppenheimer.
Single family offices like Oppenheimer can afford to think nearly 100 years ahead, Collevecchio said. That means it doesn’t have to worry (too much) about this decade’s bubble, faddy technologies, or the latest obsessions of financial journalists. But there are things happening today that it has to form a view on if it wants to benefit from them in the future.
“We’re moving towards a more multi-polar world; China, India, Indonesia, South-East Asia, parts of Africa and LATAM – will play a bigger share of world politics,” Collevecchio told the Milken Institute’s Asia Summit.
“EM has underperformed, but what’s your view there? Climate change is potentially becoming irreversible – I’m not an expert but you’re seeing not enough being done on mitigation and only 7 per cent of all climate resilience spending is being done on adaptation. Should we be doing more towards that? What are migration trends going to do to infrastructure?
The US market has been the main driver of returns in the portfolios from the smallest retail investor to the biggest pension funds, Collevecchio said – but 40 per cent of the world’s GDP is now in the emerging markets. If investors believe that, in 30 years’ time, China is going to be the largest economy in the world, they can’t go there (and win) in 30 years’ time. They have to plan and build their base ahead of that.
“We want to move beyond the headlines – it’s not about… just jumping around. It’s about how you see where you’re going in the long-term, how you can protect your downside and grow. If you think about the meta-trends that are playing out, which is why we’re building into (Asia – some things are happening and we don’t know exactly how they’ll happen or how we should play them, but it’s important to take a view.”
“You have the ability to not think in terms of fund life. You have to obviously manage your liquidity and all these things but at the end of the day you can take this long-term exposure and do both things: you can still diversify your exposure and think about the multi-asset endowment style approach, but you can also say the world is going in this direction, what might it look like in 30 years, what are the regions that are going to win, the technologies that are going to win, and position yourself for that – take a few big bets, which may be right or wrong, but on the margin the portfolio allows you to plan for the future.”
But in terms of how Oppenheimer Generations actually makes those big bets – the investments that will drive its returns for the next 100 years – it’s not always about going it alone, or “having the arrogance to think you have all the answers”.
“We are blessed in this day and age to have new technology coming out and people will tell you that AI can now design your portfolio,” Collevecchio said. “I think there’ll be a lot of debate about that. But there are people who can bring the best of breed in how you design and manage the funds you want to pick.
“At the end of the day you have to think about what is your DNA as a family, what are you good at, what are you passionate about, what values are you trying to achieve? If you’re a great real estate investor maybe you keep that part in-house… you bring the best everybody has to offer but still keep what is uniquely yours and where you think you can win.”
