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Michael Mulcahy, Senior Consultant and Investment Manager, and Raymond Lam, Consultant visited global equity managers across seven cities during a recent research trip concluding in March – here are their key takeaways.
Michael Mulcahy, Senior Consultant and Investment Manager, and Raymond Lam, Consultant visited global equity managers across seven cities during a recent research trip concluding in March – here are their key takeaways.In this article
As part of JANA’s regular programme of global research trips, Michael Mulcahy, Senior Consultant and Investment Manager, and Raymond Lam, Consultant, from JANA’s Global Equities Research Team recently visited Paris, Rotterdam, Brussels, London, New York, Washington and Los Angeles over late February and early March. The three broad focus areas of this research trip were:
Investment InsightsIn addition to these focus areas, high-level themes emanating from the meetings revolved around the ongoing performance disparity between growth and value style managers:
Given this context, differentiating between growth managers will become more important, whilst ensuring that value managers do not succumb to style drift from their stated investment process and philosophy remains a key monitoring point.ESG InsightsThe importance of incorporating ESG considerations into investment processes is becoming more broadly accepted, even within the US investment culture which has traditionally been a laggard in this respect relative to Europe and Australia. The discussion around ESG has evolved over time from a more niche topic to a generally accepted risk-mitigation practice, with a targeted focus on the ESG factors that are most financially material to individual sectors and companies. Managers with a strong ESG/SRI focus have built up dedicated teams to assess ESG criteria across sectors, regions and individual companies, with some turning their attention to assessing sovereign ESG ratings. For those managers that specifically identify as ESG/SRI-focused and have built their reputations upon these credentials, we observed a wide spectrum in terms of the overall robustness of investment processes compared to what we would consider to be top echelon investors. More and more traditional managers are making evident progress in their ESG research, resourcing and philosophy however, which bodes well for the industry’s ongoing trajectory of concerted genuine ESG integration and investment outcomes.Geopolitical InsightsOn the topic of geopolitics, we sought to focus discussions beyond the US/China trade war tweets and news flow driving shorter-term market movements, instead focusing on the potential longer-term structural implications. Some noteworthy points to come out of conversations held with subject matter experts and managers included:
In conclusion, whilst ongoing developments in the US/China trade war have contributed towards marked short-term movements in investment markets and sentiment over the past year, there are longer-term structural investment implications to consider regardless of how the current trade negotiations play out.
JANA Market Commentary - April 2021
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