So investors may want to consider systematic macro strategies that seek to go short both equities and bonds when inflation surprises on the high side. It may be that interest rates trend higher, reversing the trend we’ve seen over the past several decades.īonds may no longer offer protection for long holdings in equities. Even when that happens, it is not clear that fixed income will necessarily be a good hedge moving forward. Policymakers are admitting that it will take time to get inflation back under control. Traditional investors are being forced to face the fact that bonds have not protected their equity holdings this year because inflation turned out to be higher than expected. Yes, we see positive demand trends continuing. Do you expect positive demand for liquid alts and the Fund’s approach in 2023? If so, why?Ī. As a result, we’ve been short on the front end of the yield curve in fixed income, short equities and long the dollar – and we still have these positions today. Our models were sceptical that policymakers would be able to deliver a soft landing. 4 Portfolio positioning reflects our skepticism regarding policy. The Fund’s success through the first nine months of 2022 drives the point home considering how volatile this year has been. A volatile environment marked by macro-economic and, especially, policy uncertainty represents an ideal backdrop for our approach. How are you positioning the portfolio in these uncertain times?Ī. Wadhwani has more than 30 years of investment experience 3 and sat on the Bank of England’s Monetary Policy Committee before founding the London-based multi-asset macro specialist now known as PGIM Wadhwani. Sushil Wadhwani, CBE, Chief Investment Officer, leads a team of about two dozen investment professionals. What is the make-up of the Fund’s investment team?Ī. Past performance does not predict future returns. 2 That builds on a seven-year track record of the Fund achieving its targeted information ratio. It was ranked first year-to-date out of 880 funds in The Investment Association’s ‘Flexible Investment’ category and third over one year out of 847 funds. The Fund has held up well over the recent market turmoil. We aim to deliver a positive return of the London Interbank Offered Rate, plus 5%, while simultaneously attempting to limit drawdowns, with a volatility target of 7% 1. Our portfolio takes both long and short positions in stocks, bonds and currencies, and seeks to deliver returns that are uncorrelated to equities and bonds over a full market cycle. The Fund employs a systematic macro strategy that offers investors diversification from the traditional capital markets through liquid alternative solutions. We strive to offer investors results that can’t be achieved through long-only approaches using traditional asset classes. What is the Fund’s strategy and what are you trying to achieve for investors?Ī. Michael Dicks, Chief Economist and Deputy Head of Research at PGIM Wadhwani, discusses the investment strategy of the PGIM Wadhwani Keynes Systematic Absolute Return Fund and explores how an agile global macro liquid alts strategy could adjust quickly to market volatility, deliver uncorrelated returns and help investors diversify portfolios.
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