The Franklin Templeton Institute hosted the Global Investor Forum last week in New York featuring internal and external speakers with expertise across economics, history, foreign policy, sustainability and investment management. Here are my key takeaways:
- Disruption is happening across all asset classes. The current investment landscape is being shaped by forces that are very different than what we’ve seen in the past 40 years. Some of these forces include geopolitical upheaval, the widening mandates of central banks, wider availability of alternative investments and the potential for blockchain to disrupt old asset classes and create new ones.
- Democratization and innovation are the future of asset management. Portfolios will include a wider range of asset classes, including private investments and the tokenization of a broad range of assets. Asset managers should build an ecosystem of solutions for clients that includes both a wider range of asset classes and innovative delivery mechanisms.
- All roads lead to sustainability. The fiduciary duty of asset managers may extend to engaging with companies and governments on the importance of sustainable investments that also can lead to economic growth.
- China and the United States remain center stage. The key to global investing will remain focused on China and the United States and the relationship between them. Their relationship is evolving to be more competitive rather than collaborative, which will have wide-ranging geopolitical and investment ramifications.
- Is the past really prelude? Historical cycles have often been relied upon to better predict the future, but the past may not actually be a good predictor. Look for patterns rather than cycles. Be prepared for the unexpected.
- Adaptability, flexibility, and creativity will be necessary to achieve alpha. Alpha may be redefined from being based on outperforming benchmarks to returns achieved through superior idea generation focused on better optimizing specific client objectives.
We live in exciting times with many dangers and opportunities. Stay tuned as the Institute will explore these issues in greater detail.