A new horizon

In hindsight, the superlatives have followed one after another in global markets’ wild ride this year. Not only did bonds and equity markets tumble in unison, leaving investors with nowhere to hide, but the difficult year also made the traditional 60/40 portfolio theory look exposed to vulnerabilities.

Marked by some of the wildest market moves, inflation soared to a 40-year high; the S&P 500 posted its worst first half in more than 50 years, dropping 20.6% during the first six months of this year; and we saw the worst bond selloff in decades.

Market gyrations, economic worries, rising interest rates, high inflation, geopolitical situations, and fears of a looming recession kept investors as well as allocators on tenterhooks this year.

In light of this, our fund selector community in the Middle East gives us an inside view of what investment themes and funds they are looking for to make portfolios resilient to market volatility.

Given the market uncertainties, selectors are looking to add funds beyond the traditional equity, fixed income, thematic and multi-asset space to explore opportunities in inflation protection products, ESG focus and Shariah-compliant offerings.

Uncorrelated strategies such as alternative investments including liquid alternatives, hedge funds, venture capital, senior floating rate loans, US life settlement, long-only quant-driven multi-asset strategy are also among the key investment themes fund buyers are looking to add to their buy lists.

At the other end of the scale, against a backdrop of heightened volatility, selectors have been seeing rotation between growth and value, while flows in passive investments have been significant too.

We believe this special issue will bring a new perspective to your investment approach, and we hope you will enjoy reading it as much as we did while compiling it.