The most recent update from Dr Jerome Lander is a compelling watch. Investment markets have started the year strong. However, Dr Lander points out, we still face several domestic and overseas challenges. Are markets not factoring in the high risk of recession, reducing corporate earnings and potentially higher unemployment?
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Dr Jerome Lander’s key insights:
- A volatile start to 2023.
- The risk of recession remains very real later in 2023, with company earnings under pressure, and interest rates set to move higher around the world.
- The rising cost of debt and capital is rising, which will likely be a problem for real economic growth.
- It is very rare for markets to bottom ahead of a recession. Therefore, if a recession occurs and unemployment rises, we will likely see a further devaluation of traditional financial assets.
- We believe that geopolitical risk is being underestimated, and it is, therefore, prudent to be cautious with portfolio positioning.
- Property markets remain under pressure due to rising interest rates, higher repayments and reduced borrowing capacity. It is offset to some degree by increasing immigration and supply shortages.
- Bonds have remained volatile in line with changing interest rate expectations, and prospects remain uncertain.
- It remains vital to remain well-diversified and ready to adapt to emerging opportunities.
- Dynamic Asset portfolios remain much less volatile and risky than the traditional 60/40 SAA portfolio. Our dynamic asset allocation approach has led us to be conservatively positioned given the market outlook, with lower weightings to equities and higher weightings to commodities, precious metals and alternatives.
- Dynamic Asset is well positioned to protect portfolios against market downturns and capitalise on future lower equity and other asset prices.
- Opportunities exist to increase holdings of risk assets later in 2023 as equities typically sell off in a recession.
About Dr Jerome Lander
Dr Jerome Lander is responsible for asset allocation, fund manager selection and portfolio construction of Dynamic Asset's Goals Based Portfolios.
Dr Lander is well-known in the institutional investment community. His 20 years of experience in asset management and investment strategy demonstrate his strong capabilities in multi-asset class investment management.
He was the Chief Investment Officer of the WorkCover insurance fund, responsible for managing a $12 billion institutional investment fund, reporting to the Investment Board. In that time, the investment fund ranked Australia's best institutional investment fund and the best-performing of all Mercer’s (nearly 100) institutional clients.
Jerome has also been a Director of Investment Consulting for Russell Investments, a Diversified Assets Portfolio Manager at Credit Suisse and Head of Manager Research for Van Eyk. Jerome has also served as an Investment Management Consultants Association (IMCA) board member.
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