Expert: Bertrand Cliquet, Lazard. Facilitator: Don Wild, Wild Ochre Consulting
Headlines:
- Any CIP should consider the level of exposure to Value Stocks. There was a broad agreement, in regard to now recognising “Value stocks” as a means of navigating a period of high inflation.
- Value stocks in themselves are not the single panacea, as many have “High Valuations”
- Central Investment Propositions to consider whether their chosen portfolios and Asset managers have taken fully the new potential “reality” into account
Context:
Potential for medium - and longer-term changes
We were blessed with a very experienced cohort of Financial Planners and Advisors, who were in broad agreement that there was the potential for medium - and longer-term changes.
Lazard analyses expressed the view, due to the long-term stasis of the previous prevailing stable investment conditions, had effectively led to a ‘bias’ towards growth stocks. Many of which had effectively ‘run out of steam’.
A return to Value stock was then argued to present a greater long-term opportunity for clients. To quote “Valuations matter” and any CIP should consider the level of exposure to Value Stocks. There was a broad agreement, in regard to now recognising “Value stocks” as a means of navigating a period of high inflation.
New economic environment
Value stocks in themselves are not the single panacea, as many have “High Valuations”. The focus should be on stocks seen as “Price Givers” (an economic franchise) rather than price takers. Hence these companies have greater power to manage their margins in this new economic environment.
Key Takeaways:
- For Central Investment Committees to give due regard to the changed economic environment
- The central feedback, from the participants, was confirmation they have their CIPs on watch
- The session provided a very useful focus on being cognisant on just how deep and quickly the environment is changing, and to ensure the appropriate action and guidance is provided
