- Hanneke, welcome.
As CEO of one of the world's leading asset managers,
what are you hearing from your clients at the moment
about the biggest challenges that they're facing?
- So the biggest challenge that they faced was that
in 2022 the market went through an enormous downturn.
We saw the conditions change in the market.
We've had about 14, 15 years of low inflation,
low interest rate, and we saw that change to
high inflation and an increased rate environment.
As a consequence of that, plus also the geopolitical tension
we've seen around the world led by the invasion
of the Ukraine by Russia,
we saw markets really move
into a more volatile world.
We saw the value of assets decline
and what was really different,
which is something we hadn't really seen before,
is that both the value of equities declined
by about 20% over a certain period of time,
as well as the value of bonds
because of the increases in rates.
So the conventional 60/40 portfolio
that many clients depended upon
to meet their investment objectives
had the worst returns in 40 years,
they were down by about 24%.
So that diversification benefit that was meant to occur
didn't really materialize.
So as a consequence, clients have moved into
what we call, risk-off territory,
they've switched more into cash.
They've started to come a bit back into fixed income
but they've been very, very cautious
with respect to equities
and are really rethinking their asset allocations.
- So, apart from don't panic,
what are you advising your clients at the moment?
- Actually, very much don't panic, right?
You do need to think about the long term.
It's hard when markets are more volatile
and it's hard when there is so much change
and when the conditions under which
you've been running your portfolios
have changed so dramatically.
So client engagement is clearly key in everything we do
and that has been even more true
in 2022 and going into 2023.
Now, I do think there are two things happening in '23.
One is we think it's likely that rates
will stay higher for longer.
We also think inflation will
stay a bit higher for longer, as well.
We do believe as a result that fixed income
may offer some attractive opportunities for clients
because yields are up and the prices have fallen.
So while that was not good for portfolios last year,
that provides good opportunities from an entry perspective.
I think it's going to take some time for clients
to really get back into growth equity again,
but in the meantime, they can find good value
in income equities and stock,
really stocks that pay dividends
is where we still see some good value.
So there are some things they can do
but they will have to reallocate their portfolios
and many of them are doing so.
- So, what are the key trends then
that you are focusing on at the minute?
- So we're focusing, in our business,
we're not immune from those trends,
so we've seen good opportunities for our cash business.
We see good opportunities for our fixed income business.
We also actually see very good opportunities in multi-asset.
So more modern version of what was the old 60/40 portfolio,
which you could call a simplified multi-asset portfolio.
We're now seeing opportunities for clients
to invest in multi-asset portfolios
that include perhaps gold or derivatives
alongside fixed income and equities securities
to create a more outcome-oriented return
rather than just focusing on beating benchmarks.
So I think there are some very exciting opportunities
still to be had to work with our clients
to meet their objectives.
- Hanneke, thank you so much.