Investors should focus on the long term, and screen out the noise around elections when it comes to investment strategy, according to Dan Mikulskis, chief investment officer of People’s Partnership.
Speaking at the Pensions and Lifetime Savings Association’s (PLSA) investment conference in Edinburgh on Tuesday afternoon, Mikulskis said that a lot of what is happening at the moment, in terms of elections and geopolitics, are “really just distractions”.
And while it “deeply matters” for people’s lives, the biggest risk to investors is “getting too distracted” by these events, and making investment decisions off the back of them.
He acknowledged it is “really hard” to “screen out that noise” created by these events, but investors should focus on their long-term plans instead.
On a positive note, Mikulskis said that more and more asset managers started to share their long-term expected returns forecasts “rather than just saying there is going to be a recession this year”.
Leandros Kalisperas, CIO of West Yorkshire Pension Fund (WYPF), added that the advantage of being an open scheme with long-dated liabilities is that “we can be patient” and not be “triggered by geopolitical events”. But he said it doesn’t mean the fund doesn’t follow them.
“It certainly impacts the day-to-day decision-making of my individual teams in terms of the individual stock selection,” he said, adding: “But does it keep me up at night that Trump might be a president? No, it doesn’t.”
He continued: “Do the issues in the Middle East and what’s going on with oil and gas worry me? Of course, they do.”
But Kalisperas said that being a “supertanker” with total assets close to £20bn means “taking on lots of transaction and frictional costs on behalf of members”. He added that WYPF’s aim is “to capture market returns as part of our duty” and is ”very proud of being a low cost [pension provider]”.
He added: “If we make too many knee jerk decisions, we make a direct impact into our net returns.”
Padmesh Shukla, CIO of Transport for London (TfL) Pension Fund, agreed with Mikulskis that it can be “a challenge” for long-term investrs when faced with such distractions.
“What I’ve experienced in the last couple of years as a long-term scheme is that we shouldn’t be pro-cyclical.”
He added: “We shouldn’t be supplying liquidity when the market is crying for that, and we shouldn’t be taking liquidity from the market.” Instead, it is important to understand that “we will be holding assets in some cases for decades”.
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