OUR INVESTMENT PROCESS: ALL CYCLE ACTIVE MANAGEMENT
Investment is a cyclical business - there are times to favour defensive assets, or pro-cyclical ones, cash or even precious metals. Many investment managers will consider valuations as a cornerstone of their investment process, which whilst clearly a useful guide for navigating the inevitable volatility inherent in financial markets, may be to miss a more fundamental driver of asset class prices - liquidity.
We use a particular lens to view the world - one which draws heavily upon the liquidity available in the financial system, as we feel it is an oft overlooked but pivotal driver of the business cycle - and by extension, the prospects for asset class prices too.
Financial shocks which lead to falls in equity and bond prices, may not be driven by a global economic slowdown, just in the way that gains in equity markets in recent years may not have been justified by earnings growth or improvements in the real economy. In fact ,they may well be better explained by changes in liqudity conditions.