Active Equities

• Emerging markets and China: Emerging markets have more attractive valuations than developed markets following the market declines with P/Es at a 26% discount as of 31 March. China’s inclusion in the MSCI global indices is prompting increased interest in its diversified market.
• Technology: The technology includes a diverse set of opportunities in sub-sectors ranging from hardware to online services to gaming and beyond.   Technology adoption in response to the pandemic may change the way people engage, boosting growth already strong growth.
• Health: In addition to favourable demographics, the health sector’s defensive characteristics and limited reliance on the economic cycle create resiliency and potential for growth    

Countries, sectors and individual stocks have reacted differently to the COVID-19 pandemic, creating a dynamic environment for active stock selection.

Active managers can take advantage of a high dispersion environment, where what you don’t own can be as important as what you do own.

Unconstrained strategies give managers the flexibility to pivot to the what they believe are the biggest areas of opportunity while avoiding areas expected to underperform. High conviction strategies offer the potential for amplified returns through concentrated portfolios.

During the rebalancing process, consider increasing exposure to sustainable investments through dedicated impact strategies or implemented within traditional equity mandates.

Investors are increasingly aware that material sustainability-related factors can be tied to a company’s long-term growth potential. This makes sustainable investing a necessary component of a comprehensive research and due diligence process.

Flows to sustainable strategies support the idea they are becoming the norm, not an anomaly.