Members of our Ideas Factory share their latest investment thinking through three publications:
‘WorldWatch’ provides timely insight into topical macroeconomic and geopolitical issues from around the world.
‘White Papers’ offer in-depth analysis of the ideas and themes that drive our investments.
'Outlook' is a regular update on how our investment experts see markets and economies.
WorldWatch
We believe that Trump’s election victory is an enormous opportunity as we cross the Rubicon into a more volatile, polarised world. This investment environment will likely be characterised by increasing uncertainty, event-risk, and a divergence in performance between relative winners and losers. In short, it should suit truly active, contrarian and agile investors such as TT. In this piece, we discuss some of the scenarios that markets may be overlooking, and therefore where opportunities could lie, before outlining some potential EM winners and losers from a Trump presidency.
Amid a widening economic growth differential, attractive relative valuations and light investor positioning, we see multiple reasons for asset allocators to revisit EM, with the Fed’s first rate cut being a key catalyst for this shift to begin in earnest. After many years of disappointing returns from EM assets, we believe it is their time to shine.
There has been much discussion recently about ways to increase investment into the UK equity market, with both the former and current governments keen to encourage pension funds to allocate more capital domestically, while the FCA seeks to enhance the London Stock Exchange’s appeal for new listings. Having managed UK equity portfolios for over 25 years, recently celebrating two decades of running the TT UK Equity strategy, I wanted to offer some perspectives on the current landscape, what is changing, and why I believe pension funds should be seizing the compelling opportunity that UK equities offer today.
At the heart of TT's Environmental Solutions Strategy is its commitment to supporting charitable causes, directing capital towards meaningful initiatives that address environmental problems and align with the fund's values. Our innovative fee structure is designed to deliver tangible impact, with one-third of our management fees given to carefully selected environmental charities at no cost to investors. In this video, we explore four distinct charities: Heal Somerset, UWA Oceans Institute, Global Returns Project, and Thousand Year Trust, all of which the strategy actively supports.
Amid China’s woes, it is easy to forget that Asia offers some of the most exciting structural growth opportunities in the world.
Datacentres are not a new phenomenon - the world has been seeing rapid growth in the deployment of datacentres for many years. But more recently this growth rate has been accelerating due to the adoption of AI, with strong growth expected to continue for many years to come. This has widespread implications for the environment, for economies and for equities, including our environmental universe.
White Paper
For years, US exceptionalism has been driven by the dominance of its tech giants, an energy boom and aggressive government spending. But as these forces start to wane, Emerging Markets are stepping into the spotlight, bolstered by cyclical tailwinds, a peaking dollar, structural advantages, attractive valuations and diversification benefits. Indeed, the correlation of MSCI EM and MSCI China to the S&P500 is now just 0.26 and 0.1, respectively. Investors are rapidly recalibrating their strategies for this new reality. So, is this the dawn of a long-awaited EM renaissance?
Following a perfect storm for EM assets and years of chronic underrepresentation in global portfolios, we believe the time is right for investors to increase their allocations. Both cyclical and fundamental factors now favour EM, whilst the asset class will continue to provide significant diversification benefits at much lower valuations. Moreover, increased geopolitical risk, policy uncertainty and elevated volatility provide fertile ground for alpha generation.
However, as information becomes more widely available, the asset class is now better researched and increasingly efficient. At the same time, market structures are shifting, with local markets now dominated by domestic investors. A changing investment landscape demands a different approach. We see a strong case for a truly active, nimble and contrarian process that exploits market ‘blind spots’ and differences in behaviour between investors to generate asymmetric returns.
Learn why we believe that now is an ideal time to be allocating to global smid-cap stocks.
TT’s Global SMID-Cap strategy recently celebrated its first anniversary, beating its benchmark by +8.1% gross (+6.9% net) in the year to 28th November 2023. In the three months since, it has added a further +5.4% gross (+5.1% net) of outperformance. We are delighted with these results and are pleased to see that the time we spent constructing our philosophy and process is paying off for our clients. This paper elucidates our approach to delivering Thematic Alpha, wherein we concentrate our team's investment expertise on global themes. It also delves into our Fundamental Alpha, achieved through a disciplined stock-picking framework encompassing Quality, Growth, and Valuation factors. Finally, it discusses Sustainable Alpha, leveraging TT's advanced ESG capabilities to align the portfolio with the UN Sustainable Development Goals. By combining multiple sources of alpha into our investment process, we aim to continue delivering outperformance for our clients.
The world is not on track to achieve the Paris Agreement temperature targets, and low carbon investing in isolation is unlikely to change this. The magnitude of the environmental crisis facing our planet requires that allocators take bold and creative action. In this paper we set out the case for supplementing a low carbon approach with an environmental solutions strategy, which we believe will grant investors access to the biggest structural growth opportunity of a generation.
We discuss the strategy’s genesis, objectives and key differentiators, before outlining why we find environmental equities so exciting looking forward.
TT International issues a rallying cry to the wider industry calling for Impact Investing 2.0, where sustainable funds give one-third of their management fees to carefully selected environmental charities, as the TT Environmental Solutions strategy does.
Outlook
Latest Asian economic and market outlook.
Latest Emerging Markets (Core) economic and market outlook.
Latest Emerging Markets (Unconstrained) economic and market outlook.
Latest Environmental Solutions outlook.
Latest ACWI ex-US economic and market outlook.
Latest UK economic and market outlook.
Latest Global SMID-Cap economic and market outlook.
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