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Despair and hope in 2021: Investments, life and the environment

26 Jan 2021

Andrew Canter / Chief Investment Officer

Video

"Welcome to 2021, and welcome back to work..." A reflection on the year gone by, and our vision and plan for the year ahead at Futuregrowth.

This is Andrew Canter, CIO of Futuregrowth Asset Management.

Welcome to 2021, and welcome back to work. We want to share some of our thoughts on the environment we find ourselves in, and our plans for the coming months.

Collectively, we all face uncertainty, and in many ways our anchors have become unmoored.

Global investment markets have professional investors scratching our heads. Bitcoin, Tesla, the S&P 500 have us debating the definitional difference between "Manias" and "Bubbles" - in either case it’s a warning sign. With prices being driven by very low interest rates, we are all - in effect - bond investors now. (I'll do a separate video exploring this topic.)

COVID's unpredictable impacts are sewing fear -- while death and disease stalk our world, and we don't even have our normal tools to deal with fear and mourning.  We've lost personal engagement, community, support, and hugs. In this sense, the fabric that binds us together is being torn.

Further, some of our long-held, core beliefs are being challenged. Global political behaviour has called into question the very essence of democracy and fairness. Extremism has become normalised, and may not go away quietly. We must each question whether our supposedly "independent thoughts" are our own, or are planted by the algorithms that feed us. All this raises the question about what is "truth"… what is "reality".

Scarily, but thankfully, we've woken up to the damage humans have already done to the environment, and the dire consequences of continued ecosystem degradation and unabated carbon emissions. David Attenborough's book and documentary "A Life on Our Planet" are alarming as they irrefutably demonstrate the speed and scale of the damage we've done. Global changes that normally happen over thousands of years are accelerating to occur in less than one man's lifetime.

That’s quite a laundry list of despair, but in each of these areas there is some light at the end of the tunnel:

  • Vaccines are being rolled out and we can look forward to some protection for the most vulnerable, as well as gaining "herd immunity" from actual infections.
  • A recession was over-due, and now it’s done. Assuming the vaccine-scenario holds, and given the depth of the recession, a good economic "bounce" is almost inevitable.
  • Thankfully, the US has rejected its worst sentiments, and seems ready to stabilise its own affairs and to start playing a productive role in the world again.
  • The emergence of cost-effective alternative energy can mitigate carbon emissions - if we are able to rebuild our power, industrial and transport systems, and overcome political obstacles.
  • As for the questions of "truth, reality, and manipulation" - knowledge and awareness are a good (but not sufficient) first step.
  • We've all gained more perspective on work-life balance and life's priorities. Whether that is good for economic productivity, and whether it lasts, remain an open questions.
  • Another year of COVID will certainly cement the positive and radical shift to remote working, as well as the paperless office, and much less business travel - all ideas which bounced around unfulfilled for 20 years.

As for Futuregrowth in 2021 and beyond:

For several years, in the face of government delays, we've deterred clients from larger allocations to developmental assets. But a new focus by government on project preparation, and the dire need for economic pump priming, job creation and efficiency, points strongly toward a renewed focus on infrastructure investment - notably in the power sector and, crucially, with private sector finance. In addition, we see opportunities in SMME finance, private equity, venture capital, and various technology-driven opportunities. The world is rewiring, and that creates investment opportunities. All that, in addition to opportunities in nominal and real-rate debt, seem to offer relatively high real-yields to long-term investors. 2021 and beyond are rich in investment opportunities.

Always a believer in transformation, we expect that during 2021 Futuregrowth will make notable strides in both our internal and external transformation - and we look forward to sharing that with you.

Further we will be focusing on expanding our impact reporting - with more focus on the UN's 17 SDGs and with particularly detailed work in climate policy/carbon-emissions, transformation, gender lense reporting, biodiversity, and more.

Operationally, Futuregrowth has appointed a new head of Business Development as well as new head of the Listed Credit team - both joining in the first quarter of 2021. We'll be adding further staff in both those important areas. Further, we've already appointed a head of Client Relationship Management, and buttressed that area. We'll be making additional hires in various areas, notably dealing, credit, business development and our middle office.

All members of the Futuregrowth team and our business partners have suffered losses amongst their friends and family, and I reach out to you all with condolences. But I want to particularly pay tribute to Nazley Bardien, fund manager, dealer and a colleague of over 20 years whom we lost to cancer at the end of 2020. This was an additional blow to us, and we mourn her.

Feel free to reach out to the Futuregrowth team for any purpose or at any time during the year. Thank you for your time, and we look forward to working with you to serve investors during the coming tumultuous year.

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Andrew Canter