Bloomberg Invest: Strategies for Wealth Creation
March 22, 2023
As the world continues to be buffeted by geopolitical tensions, increased market volatility, high inflation and challenging supply chains, we ask: how should we put our money to work now? We bring together the most influential figures in investing to identify the biggest risks and greatest opportunities facing investors in the United Kingdom, Europe and beyond.
- John Micklethwait, Editor-in-Chief, Bloomberg
- Luke Ellis, CEO, Man Group
- Hubert Keller, Senior Managing Partner, Lombard Odier Group
- Sharon Bell, Senior European Equity Strategist, Goldman Sachs
- Alexander Chartres, Partner & Investment Director, Ruffer LLP
- Seema Shah, Chief Global Strategist, Principal Asset Management
- Kurt Björklund, Managing Partner, Permira
- Philipp Freise, Partner, Co-Head of European Private Equity, KKR
- Imogen Richards, Partner & Global Head, Investment Structuring and Strategy, Pantheon Ventures
- Daniel Pinto, Founder & CEO, Stanhope Capital
- Davide Serra, Founder & CEO, Algebris Investments
- Lule Demmissie, US CEO, eToro
- June Felix, Global CEO, IG Group
- Victoria Scholar, Head of Investment, Interactive Investor
- Mathieu Flamini, Co-Founder & CEO, GFBiochemicals
- Joan Solotar, Global Head of Private Wealth Solutions, Blackstone
- Oliver Barker, Chairman, Sotheby’s Europe
- Adriano Picinati di Torcello, Global Art & Finance Coordinator, Deloitte
- Loa Haagen Pictet, Head of Arts, Chief Curator, Collection Pictet
- Carolina Brochado, Deputy Head of EQT Growth Advisory Team, EQT Partners
- Eric Collins, CEO & Founding Member, Impact X Capital Partners
- William de Gale, Co-Founder & Portfolio Manager, BlueBox Asset Management
- Taavet Hinrikus, Co-Founder, Wise and Co-Founder, Plural
- Sebastian Lyon, Founder & Chief Investment Officer, Troy Asset Management
- Francine Lacqua, Anchor, Bloomberg Television
- Dani Burger, Anchor, Bloomberg Television & Radio
- Lizzy Burden, Correspondent, Bloomberg Television
- John Stepek, Senior Wealth Reporter, Bloomberg
- Jan-Henrik Foerster, Private Equity Deals Reporter, Bloomberg
- Kristine Aquino, Managing Editor, Bloomberg Markets Today
- Alex Webb, Correspondent, Bloomberg Quicktake
- Ben Stupples, Wealth Reporter, Bloomberg
- James Tarmy, Arts Columnist, Bloomberg
- Tom Mackenzie, Anchor, Bloomberg Television
- Merryn Somerset Webb, Senior Columnist, Bloomberg Opinion
Banking Sector Crisis
John Micklethwait, Editor-in-Chief, Bloomberg, reflects on the current banking crisis, saying it comes at a time when “mercantilism is on the rise”. He adds that a financial crisis is about debt, but unlike previous crises, this time the debt isn’t just in the banks. When we look back, we will see a period of open markets and somewhere during the Trump presidency, compounded by the Biden presidency, we went from a global world to one that is much more regional.
Luke Ellis, CEO, Man Group, doesn’t think the crisis is over and a significant number of banks will not exist in 12-24 months from now. To get inflation down in the US they have to “break some stuff”. To get inflation back to 2% there needs to be more people looking for work, than there are jobs available.
On machine learning, Ellis praises ChatGPT for its ability to consume a vast amount of words and generate nuggets of information. However, since much market data is noise and machine learning looks to find patterns and take a position, it’s less helpful in the financial industry.
Hubert Keller, Senior Managing Partner, Lombard Odier Group, thinks that the green economic revolution could become the growth story of the next two decades – much like the tech revolution. Although there’s a tendency to underestimate the scale and speed of innovation, he reminds us that 90% of solutions to solve the environmental crisis already exist.
Navigating a New World
Sharon Bell, Senior European Equity Strategist, Goldman Sachs, describes the banking system as “confidence – and if that starts to disappear you still have a problem.”
On 60/40, Seema Shah, Chief Global Strategist, Principal Asset Management, believes to get any yield or return on your portfolio, you have to step outside the box.
The real lesson of last year, says Alexander Chartres, Partner & Investment Director, Ruffer LLP, is that if you’re solely reliant on conventional assets to diversify your portfolio, there are going to be times where there are no places to hide.
The conversation turned to Crypto. Adding it to your portfolio adds volatility and risk, cautions Bell. The other issue is that “it doesn’t correlate at all well with anything, and its correlations move a lot, so you can’t pin it down.” Rounding the session off, Chartres concluded, “Gold is the new Bitcoin.”
Tapping into Private Markets
Philipp Freise, Partner, Co-Head of European Private Equity, KKR, says to “convince people to partner with you, whilst maintaining a significant share in whatever it is they’re bringing in, and participate in future value creation” is sound value creation.
Kurt Björklund, Managing Partner, Permira, feels that blaming a lack of financing, or the cost of financing, is a “lame excuse for not investing well.”
Imogen Richards, Partner & Global Head, Investment Structuring and Strategy, Pantheon, proposes that alongside private credit becoming important, the Secondaries market offers a ‘really interesting’ solution. Philipp agrees, adding, “Secondaries is the place to be in the market now.”
Björklund is optimistic about the future, stating that this kind of environment historically has created some of the “best vintages for private equity investing.”
In Conversation With Algebris Investments and Stanhope Capital
The Federal Banks were irresponsible to take the interest rates so high in a short period of time, claims Daniel Pinto, Founder & CEO, Stanhope Capital. He predicts a “looming credit crunch” as a fallout of the banking crisis and predicts that banks will return to their roots and DNA.
On the collapse of SVB, Davide Serra, Founder & CEO, Algebris, says this time around assets are fine. Instead it’s a liability problem associated with “not normal banks”, such as SVB which had a concentrated clientele, all billionaires, who panicked and moved quickly.
The Rise and Fall of Retail Investors
We’re entering an age of uncertainty where cash is less attractive, begins Victoria Scholar, Head of Investment, Interactive Investor. This means that if you’re not investing, you’re losing, which is putting pressure on investors to find solutions.
June Felix, Global CEO, IG Group, is seeing movements into gold and oil at the moment and states the importance of staying light on your feet and being able to pivot quickly.
As for regulation, Lule Demmissie, US CEO, eToro, says Crypto is under scrutiny globally to figure out the level of regulation necessary, but suggests “it’s going to be market by market.”
“I’m a never-ending student,” confesses Mathieu Flamini, Co-Founder & CEO, GFBiochemicals. The former Arsenal footballer advocates equipping professional athletes with financial information to support them. Now an entrepreneur, Flamini believes that “with a bit of determination you can be successful”. Questioned about the investment in GFBiochemicals, he revealed it had been “tens of millions” over the past decade.
In the wake of recent US disruption, Joan Solotar, Global Head of Private Wealth Solutions, Blackstone, is frequently asked ‘where are the opportunities in the wider world’ by clients. She describes the current crisis as one of “confidence and liquidity” and emphasizes, “Beyond the asset class, where you invest matters.”
Art & Collectibles As An Alternate Asset
Adriano Picinati di Torcello, Global Art & Finance Coordinator, Deloitte, believes that the characteristics of art make it appropriate to be considered a capital asset.
Oliver Barker, Chairman, Sotheby’s Europe, explains that since the mid-1950s, art has risen by 8.5% annually. However, he cautions that it’s not an ‘ideal asset’ since it requires some maintenance and upkeep. While it may be too early to see if the return on investment is significant, he emphasizes the importance of passion and enjoyment when it comes to buying art.
Investing in art as a long-term strategy is possible, but Loa Haagen Pictet, Head of Arts, Chief Curator, Collection Pictet, reveals “You can make money on the art market, but we don’t buy it in that sense.”
Barker feels optimistic about the future, stating that art is an ‘asset class’ that people turn to. However, it’s also a long-term strategy and not something to sell quickly. He observes that the Asian collector base is currently very active.
Investing in Tech: Hedging Against Inflation
Taavet Hinrikus, Co-Founder, Wise and Co-Founder, Plural, understands that we’ve gone from an environment of abundance to one of scarcity. But there is room for hope, Eric Collins, CEO & Founding Member, Impact X Capital Partners, sees the current inflation challenges as ‘clearing the decks’. While William de Gale, Co-Founder & Portfolio Manager, BlueBox Asset Management, expects that cuts will ‘create seeds of the next founders’.
On SVB, Carolina Brochado, Deputy Head of EQT Growth Advisory Team, EQT Partners, said that people flocked to the bank as it had ‘nice interest rates’, but the cycle turned, and those that didn’t turn their attentions quickly got caught out.
Looking ahead, Taavet believes that European businesses are leaner and in a much better position in a world with less capital. London is in a very good position, as long as it can attract talent.
Merryn Talks Money
Inflation is not going away, claims Sebastian Lyon, Founder & Chief Investment Officer, Troy Asset Management, in conversation with Merryn Somerset Webb, Senior Columnist, Bloomberg. There’s a long journey ahead with more volatility to come; patience is key.
The War in Ukraine was a massive wake-up call. If people thought inflation would return to 2%, it made everyone realize it needed to go up, and quickly. However, in the long-term, it’s wages that you “have to look to, ultimately.”
When it comes to Crypto, Lyon puts it in the ‘too-hard bucket’, adding that volatility is the definition of how to value something, so if people don’t know how to value it – it must be volatile. On the other hand, with gold up 10% last year, it has its role to play in terms of defensibility.
As a final point, he notes the loss of some great UK companies that have not been replaced, such as Cadbury’s. He admits, “Sadly there is no resolution to that.”