Generation next: Elston’s Qiao on bouncing bonds and ‘true active’ investing

Elston Consulting fund selector Jackie Qiao discusses how she sees active funds evolving over the next decade

Jackie Qiao, Elston Consulting
Jackie Qiao


Q: Which asset classes, sectors or strategies are attracting your attention and why?

Bonds have obviously come out of the wilderness after many years, so I’m presently interested in the optimum way of maximising yield without taking on excessive duration or credit risk. Sterling volatility and relentless dollar strength means currency considerations are key, too.

Q: What asset classes should investors be thinking about beyond equity and bonds?

Within alternatives, we have been using risk-constrained real assets to provide diversification and improve inflation resilience. While inflation is now moderating, it will remain structurally higher for the medium term, in our view.

See also: Don’t count out active management amid land grab by passives

Q: How do you see sustainable and ESG-oriented investing evolving from here?

It’s definitely not a fad – the ultimate aims and benefits of ESG investing are clear – but there are still likely to be definitional bumps in the road ahead. Regulation and standards need to evolve fast in order to minimise risks of greenwashing and ensure investor confidence is maintained. That’s a big, multi-jurisdictional task, so I don’t think it will be solved overnight.

See also: PA+ Sustainable investing: Transition your portfolio into tomorrow

Q: What will be different about the investment sector a decade from now?

I think active funds will have to be more clearly active. There is a large swathe of ‘closet trackers’ in the long-only retail space. We welcome differentiated ‘true active’ strategies as providing potential for alpha, but they are hard to come by. Across the board there is a focus on value for money, so we expect aggregate fund costs to continue to decline, which is good news for investors – and a challenge for fund manufacturers.

To read the rest of this article visit the October edition of Portfolio Adviser Magazine

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