Q3 & 4 2017 INVESTED IN DISRUPTION IQ Redefining Investment Performance
The New Alternatives Paradigm
Disruption in Action
Demography and Destiny Q3&4 2017 IQ magazine provides the most relevant thought IQ leadership from State Street Global Advisors.
We live in an age of disruption, in which business models, industries and even our daily lives are being transformed. As the pace of disruption accelerates, we look at game-changing shifts that are redefining ideas around investment performance and value and how investors can navigate this new landscape.
State Street Global Advisors 2 4 ALL CHANGE While macroeconomic conditions might suggest a return to “normal,” disruptions on all sides require investors to embrace change and look for the opportunities. 8 CHANGE THE GOAL, CHANGE THE GAME In our latest investment roundtable, we look at how institutional investors are redefining ideas of performance and value beyond traditional metrics. 14 THE NEW ALTERNATIVES PARADIGM Alternatives remain an important portfolio component, but liquidity lessons and factor approaches are transforming how investors build their exposures. 20 DISRUPTION IN ACTION Automobiles, healthcare and retail are in the front lines of creative destruction: we look at what those disruptions mean for investors. 32 DEMOGRAPHIC DISRUPTION Ageing populations around the world are challenging assumptions about saving and investing.
State Street Global Advisors 3 RICK LACAILLE Global Chief Investment Officer ALL State Street Global Advisors
CHANGEAs we move into the final stretch of 2017, the global economy continues to grind higher, with overall growth for the year slated to improve for the first time in three years. While the stimulus expected from the new Trump administration has languished, the equity bull market in the US nonetheless is charging into its ninth year. Unemployment in many advanced economies has reached multi-year lows, yet wages and inflation remain tame.
State Street Global Advisors 4 While we may have reached an important inflection point in the global economic recovery cycle, the kinds of structural forces that are transforming companies, industries and economies make it difficult to think in terms of any normal: new, old or otherwise.
With a more advanced recovery While we may have reached an Game-Changing in the US, the Fed has already important inflection point in the global started to normalize monetary economic recovery cycle, the kinds of Goals structural forces that are transforming policy, while other central banks companies, industries and economies We start with disruptions in our own have signaled they will begin make it difficult to think in terms of investment management industry, tapering their accommodative any normal: new, old or otherwise. where long-term investors are policies as well. Ten years after the Instead, we expect that disruptions on broadening the definitions of value, first tremors of what would become many levels are set to accelerate, and performance and objectives beyond a global financial crisis, are we finally discerning investors need to apply an all-change view to the world to traditional metrics. Rather than returning to “normal”? understand and capitalize on them. risk-adjusted returns alone, we need
Figure 1 Global Real Activity Has Improved — World, CPB World Trade Monitor
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