Global Investment Insights

with Paul Newfield, Director of Sector Research, Frontier

Paul joined Frontier in July 2019 in the role, Director of Sector Research, responsible for driving innovation and client alignment in the organisation’s research program.

In this role Paul focusses on working with Frontier’s research specialists (and driven by engagement with client teams) to explore new themes, changing markets, investment opportunities and risks in each of the many sub-sectors which make up institutional portfolios.

“Today, the speed and pace of change means we need to be deft, nimble and open to challenge existing paradigms. Our secular themes drive the agenda from the top down”, Paul remarked.

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Today, the speed and pace of change means we need to be deft, nimble and open to challenge existing paradigms.

*****

Currently, the focus of Paul’s work centres around seeking opportunities in:

Climate aligned strategies (in listed and unlisted markets),
Exploring new Asian strategies (equities, bonds and infrastructure),
Niche property strategies (particularly overseas), as well as
Specialised alternative strategies (including downside protection using derivatives).

Paul highlighted that, “while there is a lot happening in the ESG space (including a lot of greenwashing), there is also a tremendous amount of innovation – at a broad economic level, including new national policies (US for example), at a manager level and at an asset class level. Some of the papers Frontier has done such as carbon derivatives and the European emissions trading scheme, as well as the recently released public paper on decarbonisation and the risks and opportunities in equities, really excite and inspire me (and shows me how innovative and focussed our team are on this important topic).”

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Continued structural support from governments (fiscal) and central banks (monetary) could see a further run up of equity markets.

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When asked where greatest investment opportunities will lie over the coming three years Paul highlighted that a huge contingency, unprecedent in capital markets history, is how long the structural support from governments (fiscal) and central banks (monetary) continues. Massive and ongoing support could see a continued run up of equity markets, in Paul’s view.

“However, from a fundamental basis, in terms of areas where I think there are enduring tailwinds, I would be more inclined to look for opportunities in infrastructure (noting the dated capital stock in many developed countries, continued population growth, focus on renewables, more data transmissions etc), niche property focussed on health and housing, potentially in Asia across assets classes (and we have a number of papers in the works on this)”, Paul explained.

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A wealth of information creates a poverty of attention.

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From a challenge perspective, Paul sees governance and governments as the biggest challenge institutional investors face in delivering better outcomes for their constitutents and stakeholders.

Governments: As a former chief examiner of the Actuaries Institute for Superannuation and Global Retirement Systems, Paul has often written and spoken extensively on the lack of clarity of the mission/objective of superannuation.

“Today, many of the debates and discussions I think are quite banal and simplistic without any depth of understanding of the trade offs and complexities involved. It has, and it continues to, worry me. In my mind, the Your Future, Your Super (YFYS) proposed legislation is another ill-conceived piece with little understanding of some aspects of the flow-on ramifications”, Paul explained.

Note: Frontier has completed two submissions to Treasury in relation to draft regulations that will underpin the Government’s proposed YFYS package, which can be accessed here.

Governance: someone once said “a wealth of information creates a poverty of attention”. “While technology and data are tremendous enablers, I think governance is increasingly becoming the key. Today, having more data available and larger teams in some cases – illustrates the critical importance to me of good governance within funds. This is an area where the bar is continuously being lifted, where there is a governance dividend and where I think many funds can do better and should focus more time”, Paul opined.

Paul left us with some lessons he has learned throughout his career. “At times during my career (and I suspect this applies to others) there have always been times where something exogenous/external went wrong for a client.

As someone who really cares deeply about the clients I work with, I think it is in these precise times where having a partner, a consultant, a firm which truly supports you, makes all the difference.

So, my advice is, rise to the occasion, buckle down in these times and do everything possible to help (at the point of greatest need from your client) and this will form a bond, a bedrock for an enduring partnership.

For example, within the first three months of COVID-19 and volatile markets in early 2020, we produced over 50 research pieces covering every area of critical importance – the movements in markets, the factors driving returns, style differences, alpha dispersion, key issues in unlisted markets, valuations of unlisted assets etc – the client feedback on this enormous effort was very positive in that it was a tough time, capital markets were gyrating, questions were being asked in terms of liquidity, valuations etc – and many felt the real time analysis and insight we brought was helpful to them”, Paul shared.

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My advice is, rise to the occasion, buckle down in times of client need and do everything possible to help and this will form a bond, a bedrock for an enduring partnership.

*****

Disclaimer

The views expressed in this publication are solely those of the individual and do not reflect those of their employer organisation.

All information contained within this publication is general advice only, as the knowledge levels and needs of all individual and corporate investors vary greatly this publication should not be used solely as a decision-making tool, further opinions and information should be sought before making an investment decision. It is the recommendation of Global Investment Institute (GII) that you seek the opinions of a fee-for-service, independent investment adviser before making any investment decision.

The authors, directors or guest writers may have a financial interest as investors, trustees or directors in investments discussed or recommended in this document. It has been assessed by the editors that these financial interests have not had an impact on the material contained here within.

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Challenging existing paradigms in a fast changing world

Global Investment Insights

with Paul Newfield, Director of Sector Research, Frontier

Paul joined Frontier in July 2019 in the role, Director of Sector Research, responsible for driving innovation and client alignment in the organisation’s research program.

In this role Paul focusses on working with Frontier’s research specialists (and driven by engagement with client teams) to explore new themes, changing markets, investment opportunities and risks in each of the many sub-sectors which make up institutional portfolios.

“Today, the speed and pace of change means we need to be deft, nimble and open to challenge existing paradigms. Our secular themes drive the agenda from the top down”, Paul remarked.

*****

Today, the speed and pace of change means we need to be deft, nimble and open to challenge existing paradigms.

*****

Currently, the focus of Paul’s work centres around seeking opportunities in:

Climate aligned strategies (in listed and unlisted markets),

Exploring new Asian strategies (equities, bonds and infrastructure),

Niche property strategies (particularly overseas), as well as

Specialised alternative strategies (including downside protection using derivatives).

*****

Continued structural support from governments (fiscal) and central banks (monetary) could see a further run up of equity markets.

*****

*****

A wealth of information creates a poverty of attention.

*****

From a challenge perspective, Paul sees governance and governments as the biggest challenge institutional investors face in delivering better outcomes for their constitutents and stakeholders.

Governments: As a former chief examiner of the Actuaries Institute for Superannuation and Global Retirement Systems, Paul has often written and spoken extensively on the lack of clarity of the mission/objective of superannuation.

Note: Frontier has completed two submissions to Treasury in relation to draft regulations that will underpin the Government’s proposed YFYS package, which can be accessed here.

Paul left us with some lessons he has learned throughout his career. “At times during my career (and I suspect this applies to others) there have always been times where something exogenous/external went wrong for a client.

As someone who really cares deeply about the clients I work with, I think it is in these precise times where having a partner, a consultant, a firm which truly supports you, makes all the difference.

So, my advice is, rise to the occasion, buckle down in these times and do everything possible to help (at the point of greatest need from your client) and this will form a bond, a bedrock for an enduring partnership.

*****

My advice is, rise to the occasion, buckle down in times of client need and do everything possible to help and this will form a bond, a bedrock for an enduring partnership.

*****