As geopolitical risks spread to almost every corner of the world, implementing new strategies has never been more important
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As geopolitical risks spread to almost every corner of the world, taking a global, macro approach to investing is becoming increasingly important. The world is changing and so is the way successful investors use their capital. For investors who are unwilling to evolve and utilize a more global strategy, the chances of achieving decent returns are becoming increasingly slim.
“Traditionally, superior stock selection has been viewed as the only way to create to value, but we would fundamentally disagree,” says Tyler Mordy, President & CIO at Forstrong Global. “We believe that substantial value can be added through the active selection of entire investment classes. Rather than picking stocks, our firm selects themes, trends and sectors for outperformance.”
With more of the drivers that impact portfolio returns being guided by big picture trends like macroeconomics and global events, Mordy’s argument becomes difficult to ignore. Awareness around the need to diversify is growing and the paradigm shift among investors and financial firms is driving significant organizational change in the asset management industry.
“We’re moving away from siloed products provided by specialist managers to more holistic solutions from multi asset class managers, typically using ETFs,” Mordy says. “We didn’t have the ETF toolset as asset managers 10 years ago. The sandbox is much larger, and I think the ultimate result is the ability to build portfolios that can thrive in a globalized, modern world.”
As a firm believer in a global macro approach, Mordy funnels the majority of his firm’s resources toward identifying themes and trends in sectors, not selecting one-off stocks. Mordy and his team attempt to uncover what he calls the “super trends” that will drive capital markets for the next three to five years. Once they find the latest and most significant trend, whether it’s an ongoing commodity bear market, movements in interest rates, or the rise of China, Mordy and his team then selects the global asset classes best positioned to benefit from those super trends.
“Because the world is more globalized, investors are able to manage the overall risk of the portfolio more effectively with a macro approach; that’s a primary benefit,” Mordy says. “Going into the global financial crisis of 2008, we were able to see that risk was overpriced, and that allowed us to benefit from the behavioural aspect of major market movements. A global macro approach offers an attractive offset to traditional bottom up stock picking or siloed mutual fund orientation.”
“Traditionally, superior stock selection has been viewed as the only way to create to value, but we would fundamentally disagree,” says Tyler Mordy, President & CIO at Forstrong Global. “We believe that substantial value can be added through the active selection of entire investment classes. Rather than picking stocks, our firm selects themes, trends and sectors for outperformance.”
With more of the drivers that impact portfolio returns being guided by big picture trends like macroeconomics and global events, Mordy’s argument becomes difficult to ignore. Awareness around the need to diversify is growing and the paradigm shift among investors and financial firms is driving significant organizational change in the asset management industry.
“We’re moving away from siloed products provided by specialist managers to more holistic solutions from multi asset class managers, typically using ETFs,” Mordy says. “We didn’t have the ETF toolset as asset managers 10 years ago. The sandbox is much larger, and I think the ultimate result is the ability to build portfolios that can thrive in a globalized, modern world.”
As a firm believer in a global macro approach, Mordy funnels the majority of his firm’s resources toward identifying themes and trends in sectors, not selecting one-off stocks. Mordy and his team attempt to uncover what he calls the “super trends” that will drive capital markets for the next three to five years. Once they find the latest and most significant trend, whether it’s an ongoing commodity bear market, movements in interest rates, or the rise of China, Mordy and his team then selects the global asset classes best positioned to benefit from those super trends.
“Because the world is more globalized, investors are able to manage the overall risk of the portfolio more effectively with a macro approach; that’s a primary benefit,” Mordy says. “Going into the global financial crisis of 2008, we were able to see that risk was overpriced, and that allowed us to benefit from the behavioural aspect of major market movements. A global macro approach offers an attractive offset to traditional bottom up stock picking or siloed mutual fund orientation.”
