The macroeconomic reset over the past year has fuelled exceptional levels of uncertainty in investment markets through 2022. Investors experienced remarkable returns through the back end of 2020 and into 2021, driven by extraordinary amounts of monetary stimulus. Price agnostic buyers in the market distorted the pricing of assets, and ultimately risk.
Moving into 2022, financial markets were woken by the truth of the real economy as supply chain disruptions, the Ukraine war, and the forgotten phenomena of inflation bit back. Fund managers had to figure out how best to price risk for a commensurate return, faced with extremely volatile market movements in the immediate term, whilst trying to balance those risks against longer term objectives. Interest rate volatility and equity market movements have been riotous. There haven’t been many times through history where temperament, capability, and proficiency have been tested more.
Throughout 2022, we have been researching different strategies across a broad range of fund managers, predominantly based in Australia and New Zealand, but also in Europe and the US. The key risk the portfolio managers have been focused on, and continue to be focused on, is inflation. A number of fund managers we have spoken to are also zoning in on how that flows through to borrowing costs and corporate earnings. If active managers cannot add value in this environment going forward, when will they?
Key trends in the New Zealand market over the past couple of years include the continued growth of exchange traded funds (ETFs), a greater allocation to more illiquid assets, and a positive focus on sustainability and decarbonisation. ETFs are no longer just passive index-based approaches but include smart beta and actively managed strategies. Several retail-focused fund managers have direct investments in private companies, though small due to fund liquidity constraints. An increasing number of fund managers are also walking the talk when it comes to measuring their own carbon footprint as a business, let alone the carbon emitted from the underlying investments in their managed funds.
As we approach the end of the year, Research IP is once again recognising the best fund managers in the New Zealand market. The Fund Manager of the Year Awards is back for 2022…in person! After two years of virtual events, the Awards are to be held live in Auckland on Wednesday, November 16th.
Previous winners of the major Fund Manager of the Year gong include Milford Asset Management (2021), ANZ Investments (2020), and Fisher Funds Management (2019).
As in previous years, we want our awards to be inclusive, so please have your say in the Adviser and Investor Choice Awards. Voting is now open!