Time invested wisely talking up growth
U Delegates gathered in Edinburgh last week to attend the annual Scotsman Investment Conference and identify future opportunities for this year and beyond, writes Rosemary Gallagher
Investment strategies for 2024, alternative investments, the potential of artificial intelligence, sustainability and a fireside chat with Mark Beaumont, endurance athlete and partner at Eos Advisory, were all on the agenda at last week’s annual Scotsman Investment Conference.
The event was held at The George Hotel in the centre of Edinburgh last Wednesday, 20 March, with Templeton Investment Markets Investment Trust, Baillie Gifford, Calton, and Waverton as sponsors.
The first session of the day, chaired by event host Kim Mcallister, focused on investment strategies, with Sri Chandran, vice president, product specialist and ESG product lead at Franklin Templeton Emerging Markets Equity; Mark Mcsherry of the online Scottish Financial Review; Rhona Campbell, chair of Investing Women Angels, and Matthew Parkinson, fund manager with Waverton.
In his opening address, Chandran explained the growing importance of emerging economies, which now generate 65 per cent of global growth. He told delegates that emerging markets are attractive to investors because they offer growth, quality and investment opportunities. In essence, he said, they are “powering the world economy”.
Chandran went on to add that emerging markets are driving population and consumption growth.
“Emerging markets are increasingly innovative,” he observed. In terms of “why now” for global economies, he pointed out that they are currently “underallocated, underestimated and undervalued”.
On reasons to invest in the Templeton Emerging Markets Investment Trust (TEMIT), he said it is an industry-leading emerging markets equity platform that offers both local insights and global perspectives.
During the panel discussion, Campbell questioned why more people don’t invest in women founded and led organisations, as they have been shown to generate better returns. She said: “Only 2 per cent of institutional investment in Scotland goes to female-founded companies. It’s an economic imperative that we should invest more in female-led businesses.”
Meanwhile, Parkinson said that the future looks bright for actively managed funds and that his outlook is “cautiously optimistic”. Speaking about US equity allocation, he explained that the Biden administration is “encouraging” of the “old economy”, and he expects manufacturing to come back more to the States.
Mcsherry highlighted the amount of research carried out by active fund managers and their level of knowledge.
The session focusing on alternative investment comprised chartered financial analyst Lucie Majstrova, multi-asset and income investment specialist with Baillie Gifford; Andrew Castell, partner with Par Equity; Claire Armstrong, Scotland managing partner at Dentons, and Tom Edwards, associate partner with Savills.
Edwards told the audience that there is still long-term capital growth in residential property, notwithstanding a few “speed bumps” in recent times, with rental figures increasing over the last five years.
Armstrong discussed legislation and regulation around alternative investment. She touched on the introduction of consumer duty, the extension of the financial promotion regime to include cryptocurrency, sustainability disclosure rules designed to combat “greenwashing”, as well as the Edinburgh Reforms adaptations to financial services.
Majstrova pointed to sectors such as infrastructure, utilities and renewables as investment opportunities, while Castell said a smart idea alone does not make a business, but it’s exciting when you find a “perfect storm” with growth potential.
In the Sustainability and ESG session that
followed, Tom Ham, group chief executive of wealth managers Calton, explained how his firm is using technology developed by Fundment to allow clients to “not invest in stuff you don’t like without it costing you a fortune”.
In effect, Calton clients can choose to filter out elements they are not personally comfortable with, for example, tobacco or fossil fuels. This approach is known as Custom Indexing, and was described by Ham as being “your own fund manager without having to buy the suit”.
“There is an option to exclude individual securities and stocks. The rules of sensible asset allocation still apply,” he added, before explaining: “It’s about ensuring your investments match your attitudes and beliefs and measuring the impact.”
In the last session before lunch, Ben James, investment specialist director at Baillie Gifford, delivered a presentation on the impacts of the new AI approach on long-term investments.
He started by declaring that “business as usual is over” when it comes to AI, saying that the amount of data and computing power available meant that machine learning algorithms have become much more useful. James highlighted the fact that 90 per cent of all existing data has been generated over the last two years, and that we are at the start of a new paradigm, with AI, akin to the internet in the late 1990s.
Setting out how AI may impact the system, he listed the following features – an abundance of software leads to devaluation; curated and proprietary data gains value; trust in “humanness” and verification rises; energy scarcity increases and companies investing in physical infrastructure create moats; focus increases on creativity and asking the right questions, and accelerated cloud migration takes place.
Only 2 per cent of institutional investment goes to femalefounded companies. It’s imperative that we should invest more in femaleled businesses