During a recent visit to our London office, I had the privilege of attending AIMA’s Spotlight and Cocktail reception in London, the highlight of which for me was a keynote speech by Robert Peston. For those of you who were not in the UK in 2008 and 2009, Robert was one of the most prevalent economic commentators at the time (and, personally, a bit of a hero of mine).
The theme of Robert’s presentation was uncertainty and the question he asked us all to consider was whether, if 2007 was the age of absolute certainty (albeit, certainty that we were all about to suffer a painful and prolonged recessionary period), 2016 is the age of absolute uncertainty, politically and economically?
As Robert went on to describe, in his 30 years of political and economic reporting, he had never before experienced a period of such instability; Brexit and the potential contagion to other EU Member States, Trump vs. Clinton and the consequences for the US economy, and China’s growing bad debt, to name but just a handful of the global issues we currently face.
And whilst he acknowledged that for most people this would be terrible news, speaking to a room full of fund managers, he wondered whether this might actually be construed as a positive. After all, uncertainty boosts volatility and drives down valuation multiples. As the Financial Times said back in May, markets move in advance of full clarity. The more certain the picture becomes, “the more markets can focus on likely outcomes and start discounting them”.
The managers I frequently speak with certainly see it that way, and the message we are hearing loud and clear in the BVI is that now is the precisely the right time to test a new strategy. Perhaps this is the reason our BVI funds team has never been busier fielding enquiries about our new incubator fund product, a fund whose sole purpose is designed to allow managers to test a strategy and establish a track record. The early (and innovative) bird catches the worm.
If you have any comments about the above or would like to hear more about our BVI funds products, do get in touch. We’d love to hear from you.