Spotlight on Alexander Philipps, Chief Investment Officer, Longview Partners
Global Thought Leader Spotlight
Alexander Philipps, Chief Investment Officer, Longview Partners
“In my role as Chief Investment Officer at Longview Partners I am responsible for ensuring that Longview’s investment process is implemented correctly and diligently, for co-managing the investment team along with our Head of Research and for portfolio risk management. At Longview, it is the investment process itself and the investment team’s implementation of it that acts as the portfolio manager rather than any individual.
“As CIO, I am responsible for the final investment decision, but all decisions are made in accordance with, and following the completion of, our team-based research process. Portfolio construction is the responsibility of the CIO and is managed according to clearly defined rules.
“Over the last decade both equity and fixed income investors have benefitted from the combination of low interest rates, low inflation, low unemployment and unprecedented levels of stimulus. This drove an environment where valuation appeared to be of secondary importance, for some investors. Such an approach may not work so well over the next decade, when many of these investment tailwinds may no longer exist, and our view is that a more nuanced approach will be required where valuation plays a critical role.
“Equity markets have gyrated throughout 2023 as competing and contradictory narratives have moved in and out of favour. Inflation, interest rates, recession, a potential US debt crisis, China’s re-opening, geo-political conflict, and artificial intelligence, amongst other themes, have all had their moment in the sun. Predicting which narrative will dominate over the next quarter, the next year or more is challenging and presents significant risk to investors that are overly reliant on picking the right one.
“The dislocation caused by Covid-19 and the advances in artificial intelligence technologies are leading to rapid change in industries that were once seen as stable. It is perhaps more important than ever to challenge the continuation of the status quo and to investigate the potential for structural change even in industries that appear to have wide competitive moats.
“After four decades of stable inflation and falling long interest rates, Covid-19 provided the final flourish to the era of cheap/free money as fiscal and monetary largesse on an unprecedented scale led to a world awash with liquidity and encouraged the pursuit of ever more expensive and risky assets. If the zero-rate environment is a thing of the past, then this is likely to lead to a more discerning investment environment where other investments exist, and valuations are based on the expectation of future cash flows rather than growth with little regard for profitability.
“Ever-changing market narratives highlight the importance of maintaining a long-term perspective and a consistent investment approach that does not rely on correctly predicting which narratives come to pass and when. A characteristic of many high-quality companies is their ability to navigate uncertain environments and to continue to thrive operationally, especially relative to lower quality peers, no matter the conditions they are faced with. Exposure to portfolios constructed of high-quality businesses, especially those trading at attractive prices, can help to navigate such uncertain times.
“Volatile markets and rapid technological change provide a fertile environment for bottom-up active investors. Such environments can offer rare opportunities to, not only buy high quality businesses at discount prices, but also to gain exposure to those companies whose quality is misperceived. For a long-term investor, such markets offer the opportunity to look beyond the wider market narratives and consider the individual companies that are able to continue to deliver outsized long-term returns to their shareholders.”
Alex will be presenting at Global Investment Institute’s upcoming Equities Investment Forum, taking place on Wednesday, 6 September 2023 at the Westin Melbourne, Victoria.
To register your interest in attending, click here or for more information email zlatan.kapetanovic@globalii.com.au.
Alexander Philipps, Chief Investment Officer, Longview Partners
Alex is Chief Investment Officer of Longview Partners. Alex was a Research Analyst at Longview for eight years before moving into the role of CIO in January 2021. Before Longview Alex spent four years working as a Research Analyst at Sloane Robinson focusing on Asian equities. Alex obtained an MEng in Engineering Science from Christ Church, Oxford University.
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Disclaimer
The views expressed in this publication are solely those of the individual and do not reflect those of their employer organisation. These views should not be relied on as research or investment advice regarding any stock and are subject to change. There is no guarantee that any forecasts made will come to pass. Forecasts are subject to numerous assumptions, risks, and uncertainties, which change over time, and the individual undertakes no duty to update any such forecasts. International investing may involve risk of capital loss from unfavourable fluctuations in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations.
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