Andrew Lill has stepped down as chief investment officer of the $86 billion Rest, bound for parts yet unknown. The fund he leaves looks very different to the one he joined.
Authorities have had enough of greenwashing excuses, and they’re lobbing record fines at transgressors. Funds will have to lift their game.
Look beyond macro for opportunities in a ‘desynchronised world’
It’s hard to know which direction markets are heading in, and managers are increasingly taking their cues from the macro backdrop to decide what should be in or out of their portfolios. But trying to predict what will happen next is extremely hard, and the focus is increasingly on the short-term – how many basis points a central bank will cut, this month’s inflation readout or next quarter’s GDP numbers.
In that environment, it’s easy to miss inflection points for individual companies, according to Rob Hinchcliffe, portfolio manager for PineBridge’s Global Focus Equity strategy; the market might be very efficient when it comes to the near future, but the further out you go, the wider the range of opinions.
“The last several years have been particularly interesting because there’s been so much debate in the market; right now, the debate is whether we’re in for a soft landing or a hard landing, and that debate results in a lot of volatility, and that creates opportunities for bottom-up investors like us,” Hinchcliffe tells ISN. “From my perspective, this has been a really good market – I’m less concerned with whether it’s going up or down, I want to beat the benchmark.”
“If you’re focussed on the macro stuff, that presents a lot of ways to be wrong. If you’re invested for a particular style to lead the market then you can be wrong. It almost doesn’t matter what you’ve invested in, your overall portfolio is structured the wrong way.”
Hinchcliffe thinks about companies based not on what sector they’re in, or how broad-based macro themes might affect them, but on where they are in their own lifecycle – their cyclicality and stage of business development – and whether the market has overlooked something that could soon change their prospects: the track record of the management team, or if new life is being breathed into its ESG strategy that will help it win business. PineBridge is hunting in industries where capex is increasing, supply chains are moving and companies are focussed cleaning up their operations.
“One thing we hear consistently is that if business is coming down to one of two companies; the one that’s cleaner or more environmentally-friendly tends to be the winner of that business, so we’re finding opportunities in companies that help their customers get cleaner,” Hinchcliffe says.
“We’re finding opportunities in proven management teams, which is a big theme for us over time – management skill and proven leadership is a great, durable investment theme. Good teams go to new companies and those can be very good investments. Digitalisation – the cloud, AI, using data more efficiently – companies that are getting smarter about how they manage their business.”
And while the story of the 2020s has been one of extreme market concentration, the last few months have seen a “pronounced shift” in market leadership after the prolonged dominance of the Magnificent Seven.
“Right now, the world is desynchronised,” Hinchcliffe says. “Coming out of Covid, certain industries are doing well and certain industries are not doing well. Inflation is impacting companies and individual consumers differently, and the result of that is that some companies are well-positioned and some are less well-positioned; they’re competing to win, and the market is recognising that. This is a great environment for active management, and a great environment to find the companies that are winning and avoid the companies that are losing.”
