i3 8th annual Investment Strategy Forum 2019 | [i3] Investment Innovation Institute | 8 May 2019 | RACV, 1 Great Ocean Rd, Torquay VIC 3228, Australia

Legend has it that the ostrich buries its head into the ground instinctively when confronted with danger, with a ‘view’ that it is well protected. Unfortunately this myth is blind to the fact that the ostrich has many natural defences, including its superior speed.

There seems to be a consensus among market commentators that US markets are currently in late cycle, with some predicting a high probability of recession in 2020. Elsewhere in the world, economic growth hasn’t been encouraging, exacerbated by the threat of global trade wars. These is further compounded by central banks’ planned withdrawal of liquidity, progressing from QE to QT.

Against this sombre backdrop, managing portfolios inevitably becomes challenging, with some funds lowering their investment objectives.

Being defensive is the new war cry, but implementation has many faces. Of particular interest is the recent popularity of certain diversifying strategies, including alternative risk premia and crisis-risk quantitative strategies, which seem to have disappointed in the February and October 2018 market incidents.

Before making any quick judgements here, it is worthwhile understanding the overall context in which they have been implemented: Did institutional investors embrace these strategies assuming that they are the panacea of volatile markets, similar to the myth of the ostrich head in the sand? Or are these strategies just simply another toolkit in the diversification toolbox? What about ‘old fashioned’ bonds or out-of-favour strategies, eg value, that could potentially act as natural defences?

As part of the 8th annual Investment Strategy Forum, we hope to address some of these pressing issues, as investors contemplate the plethora of portfolio management approaches in this difficult environment.

Some of the themes include:
• Investment governance, total portfolio approach and the long term
• Asset allocation and diversifying strategies in the midst of late cycle
• The rise and fall(?) of factor and risk premia strategies
• Public vs private markets: Risk budgeting and liquidity challenges
• Emerging markets: Is it all about China?
• The increasing role of data science: Information advantage or data-mining?
• The sustainability and stewardship imperative
• Culture, resilience and decision-making under uncertainty