Clive Bellows, President for Emea at Northern Trust, on how top CIOs and business leaders are navigating portfolio risks and opportunities across public and private markets
Firstly, we continue to see evidence of private markets’ continued movement to the mainstream of the investment industry and of significant momentum in European fund launches.
This includes both established private market fund operators extending into semi-liquid funds and traditional household-name managers extending their products into alternative asset strategies, both in anticipation of the looming ‘democratization’ of the asset class and to enhance the unlisted exposure they can offer investors.
This is perhaps most striking currently in the UK where interest in the Long-Term Asset Fund (LTAF) remains high as funds continued to be authorised and launched. Northern Trust currently supports more than 50% of the LTAF umbrellas currently displayed as FCA-authorised on its website.
Meanwhile, recent volatility across public markets reinforces that the global economic outlook remains uncertain and that significant risks remain unresolved, not least those pending the prospects for trade negotiations, retaliation, and other related developments.
In our role as asset servicer to investment managers we certainly saw the risks of the moment reflected by increased complexity, with more clients, for example, leveraging fair valuation policies and increasing their FX and other trading activity.
Some positive news: although risk increases during such periods, the market was able to absorb this activity without any obvious operational strain – I think reflecting the investment that organisations have made in their resiliency and risk management frameworks. These periods also reflect the importance for managers of having well-tested contingency plans and strategic partnerships in place with the organisations that are core to their operating models.
