Buy-side Outlook: Finding a New Balance in a Volatile and Complex World

The inaugural outlook report from the Bloomberg Women’s Buy-side Network uncovers key drivers and themes for 2021 and beyond

Accelerated by the pandemic, asset managers will be finding a new balance between risk, return and sustainability, ensuring their portfolios remain relevant and resilient as environmental considerations come to the fore. This inaugural report  developed by the Bloomberg Women’s Buy-side Network (BWBN) alongside 11 top investors across Asia, identified key themes that were top of mind for 2021.

Risk consciousness is expected to continue to drive asset-allocation in this new normal and investors will be looking to stay nimble in the current post-pandemic rotation. They also expect to see sustainable investments to become more mainstream, as stakeholder capitalism and investor interest gains ground. Other themes covered in the report include their outlook on liquidity and debt, inflation, investing in China, diversity, the future of work and technology disruptions in asset management.

The firms contributing to this report include PIMCO, Nikko Asset Management, BlackRock, MGA Consulting, Schroders, AIA, Multiples Alternate Asset Management, HDFC Life and Kotak Mahindra Asset Management.

Key findings:

• Rethinking Asset Allocation: The flight to safer assets that dominated 2020’s investment landscape will continue; the 60:40 investment ratio could also be a thing of the past as risk consciousness comes to the fore. Low rates and volatility are expected to continue as the global system remains dominated by historically high liquidity and debt levels; while inflation will be a big question in the medium-term.
• Shift from ‘investing with purpose’ to ‘investing for purpose’: ESG is no longer looked at as a ‘feel good’ or ‘tick the box’ investing exercise, but a method of protecting asset values. BlackRock believes investors should combine traditional investing with ESG insights to improve long-term outcomes. In fact, 81% of sustainable indices outperformed the benchmark during 2020 especially in the first market downturn in March which underlines its important resilient properties. While Asia still has a long way to go, Japan, Australia and China have been showing strong climate investment leadership in the region.
• Technology disruption to be evolutionary, rather than revolutionary: The use of data, machine learning and AI in asset allocation is evolving fast, and this trend will continue — although it has been more of a displacement than disruption thus far. While this is still in an early stage, this is an area that buy-side firms are continuing to invest heavily in. With cost pressures and tighter margins expected to continue, the buy side is gearing up to leverage tech and squeeze out every basis point of yield in the search for alpha.
• The future of work and inclusion: The pandemic enabled workplace flexibility to go mainstream in 2020. For knowledge-driven industries such as finance, COVID-19 has shown that flexible working arrangements can be very effective, especially for working women. As more buy-side firms adopt proactive D&I strategies, there is huge potential to use workplace flexibility to attract and retain top female talent.

Speaking about the report, Philippa Thompson, Head of Bloomberg’s Buyside Enterprise Sales, commented, “As the world grapples with mounting debt and plunging interest rates, it will be interesting to see how buy-side asset allocation shifts into new opportunities that can better protect investor wealth in this “lower-for-longer” yield environment. The increasing complexity of our world is not lost on the largest asset managers and owners, who have the difficult role each day of deciding how best to safeguard their portfolios.” She added, “The Network will use the insights from this report to continue promoting the social purpose of the buy side, sharing key investment themes at quarterly webinars and through virtual mentorship sessions with university students across Asia.”

Please click here to access the full report. To stay up to date on BWBN activities, please connect with us at http://www.linkedin.com/groups/10537205/.

About Bloomberg Women’s Buyside Network

The Bloomberg Women’s Buy-Side Network (BWBN) is an informal community for women in asset management in Asia. Launched in 2018 in Singapore, the network has expanded to local chapters in India, Japan and Hong Kong and is helmed by some of the most influential buy-side leaders in the region. The BWBN convenes women in the buy side on global investment trends, serves to promote inclusion in the industry and, through active mentorship, educates the younger generation on the diversity of buy-side careers.