Citywire's radical Global New Ideas event in Amsterdam has come to a close after two days of high-level manager meetings, provocative presentations and fresh thinking for fund selectors. Here are the three key takeaways from conversations with delegates at the event.
1. Sustainability goes mainstream
For many fund selectors sustainability has finally progressed from a sexy theme to something clients want to see increasingly more in their portfolios.
Sustainable investments take different shapes and forms, including microfinance projects. Fund selector Michael Gollits from Von der Heydt & Co said he is visiting countries where these projects are developed rather than just investing in the ready-made funds.
However, one of the biggest challenges fund providers and investors face is how to actually measure the positive impact of investments.
While providers are moving to reshape and rebrand strategies as sustainable the question remains over how much they are actually changing their old ways.
Many topics were debated on the floor, such as whether investments in tobacco stocks, for example, can be justified as sustainable based on the companies’ involvement in good causes. This proved particularly timely given BNP Paribas AM's announcement this week.
2. Innovation gap in bond space
Fixed income remains a difficult terrain to navigate for fund buyers. During the vote on the first day of the conference the majority of respondents (67% of those in attendance) said they find bond investments the most challenging sector when it comes to new ideas.
Selectors are addressing this challenge differently, with some looking for bond funds with higher yield, such as private loans funds for example. These strategies, however, don’t come free of difficulties as their legal framework is not always clearly defined.
Another way selectors are tackling lower-yielding fixed income is through alternative investments, such as carry strategies, CTAs and liquid alternative funds.
3. Tech not a threat
Instead of defending themselves against technology investors should embrace it to achieve better results in the future.
Keynote speaker Thomas Anglero, director of innovation at IBM Norway, said people simply cannot analyse millions of data points each second as software does but they can teach AI to deliver the information they need.
‘Software can analyse every member on the board of the company and forecast that if this event is going to happen, there is a 99% chance the company is going to react in this way.’
‘With that recommendation you then use all your experience, your instincts to make a decision. This is where we are, the software is not here to replace you, it is there to help you.’
Taking this discussion one step further, closing speaker Mark Stevenson said technology such as blockchain should be used to improve democracy, economic inequality and the overall state of the planet.
He gave the development of the so-called "enernet" as an example. This being a multi-participant network built around energy generation storage which may turn the business of the energy providers upside down.
'Investment strategies now may increase your short-term wealth at the long-term expense of the entire species. That isn't a sensible strategy.'