SYDNEY

MARCH 2–3, 2016

Mercer Global Investment Forums – Sydney, 2-3 March, 2016

Forum Agenda

Contains links to related content on Mercer.com

MARCH 1, TUESDAY

15:00–17:15Manager Session

17:30–19:30Pre-Forum Cocktails

MARCH 2, WEDNESDAY

07:45–08:45Breakfast

08:45–08:50Welcome and Opening

Graeme MatherInvestments Consulting Market Leader, Pacific

08:50–08:55MC

Brian ZankerInvestments and Financial Services Sales Leader, Pacific

The current economic and market environment presents investors with many sources of uncertainty, from the pace and impact of monetary policy "normalisation" and the slowdown in China to geopolitical risks in the Middle East. So although risk management will remain high on the agenda, investors should also prepare for the opportunities that might arise from periods of market stress. In this session, we explore our key strategic research themes for 2016: handling reduced liquidity in "liquid" markets, preparing for a maturing credit cycle, tilting portfolios from beta to alpha, and thinking long term. We also discuss how these themes translate into practical investment opportunities for our clients.

Deb ClarkeGlobal Head of Investments Research

Panelists

Hendrie KosterHead of Strategic Research, Pacific

Russell GarrettInvestment Consultant

Derek MockInvestment Consultant

Long-term investing is a much discussed but often wrongly defined term. This session provides insight and clarity around what it means to invest for the long term, addressing questions such as:
  • How long is long term?
  • Which types of investor should care about the long term?
  • What practical steps can long-term investors take in their portfolios?
In particular, the session focuses on how investors might adopt a broader perspective on risk in order to address some of the difficult-to-measure risks and secular trends often ignored by traditional risk models that are biased to the short term.

Hendrie KosterHead of Strategic Research, Pacific

Phil EdwardsHead of Strategic Research, Europe

The World Economic Forum's 2015 Global Risk Report identified water crisis as the risk of greatest concern to business leaders based on a 10-year time horizon. News headlines reinforce this concern: NSW's Hunter Region and much of the American Midwest face severe flooding this January while California struggles with an ongoing five-year drought. This Lightning Talk applies Mercer's broadened risk management framework and explores how water — whether too much or too little — presents both risks and opportunities for long-term investors. We show that water is an investment risk, explore key drivers around water as an investment theme, and touch upon steps investors can take to make their funds more resilient to this key environmental risk. Importantly, we also consider how institutional investors can access quality opportunities linked to this investment theme across asset classes.

Alexis CheangInvestment Consultant

10:30–11:00Networking and Coffee Break

11:00–12:00Keynote Address

Jon SnowJournalist and Broadcaster

12:00–12:10Lightning Talk: Environmental Risk – Safe As Houses? Assessing the Environmental Risk to Property and Infrastructure Portfolios

In this session, we discuss the various environmental risks that property and infrastructure assets are exposed to and how these might impact investors' portfolios. We review short- and long-term risks and discuss what investors should do to mitigate these risks in order to enhance long-term returns.

Padraig BrownInvestment Consultant

In an increasingly fast-paced and volatile world, it is easy to forget that many of us are investing for the long term. Mercer believes that for a manager-selection program to succeed, investors need a process that looks beyond short-term performance and is geared towards identifying managers that will stand the test of time. In this session, we examine why a long-term perspective is important for manager selection, what our manager researchers focus on, and how we go about reviewing and monitoring managers for better long-term outcomes.

Rich DellGlobal Head, Equity Boutique

Sue WangResearch Specialist, Fixed Income Boutique

12:30–13:45Lunch

13:45–14:25BREAKOUT SESSIONS 1

The Popularity of Diversified Growth Funds: Why is Australia Slow on the Uptake?

When it comes to new investment trends, Australia is often at the forefront of adopting new ideas. When it comes to Diversified Growth Funds (DGFs), however, this is not the case, with British funds leading the world in their take-up of DGFs in their investment portfolios. This session defines DGFs, discusses the pros and cons of their inclusion in multi-sector funds, and considers why their adoption in different parts of the world has diverged. We conclude with Mercer's views on whether DGFs will become a more or less important part of Australian fund asset allocations going forward.

Phil GrahamDeputy Chief Investment Officer, Pacific

Jordan NaultGlobal Leader for Hedge Funds

Technology in Retirement Savings

Over the next decade, the retirement savings industry will face a whirlwind of digital disruption that will reshape the competitive landscape. Traditional business models run the risk of being left in the dust. The rise of "FinTech" is creating new business models, and customer expectations are forever changed as a result. Successful industry players adapt their strategies in order to capture opportunities and meet changing consumer demands, while others face obsolescence.

In this session, we examine the FinTech phenomenon, explore "robo-advice" as a fundamental force at the centre of technology disruption, tour the leading innovators in retirement savings technology, and offer a set of strategic implications that no established industry player should ignore.

Georgina LeeConsultant, Mercer Retirement

Cambell HoltConsumer Marketing Leader, Financial Services, Pacific

Incentivising Insourced Asset Management Staff

The trend to insource asset management is on the rise; with many superannuation funds managing parts of their investments in-house (or contemplating such a move). In this breakout, we will explore the critical challenge of appropriately rewarding in-house investment staff. How can you compete for the talent you need and motivate them to deliver the performance you expect? Is it only about pay? This session include a case study that explores the incentive program of a US pension plan.

Sarah AzziResearch Specialist, Mercer Private Markets

Chris PerrittSenior Consultant, Mercer Talent

Surviving the Drought: Bond Market Liquidity in Tough Times

Substantial and much discussed evidence exists to suggest reduced bond market liquidity since the 2008 financial crisis. You may find yourself asking: is there a drought? How bad is it? How can I survive, or even thrive?

In this session, we canvass how and why bond market liquidity has been adversely affected in recent times. In addition, we detail what this means for both the asset manager and end investor and delve into a toolkit of survival measures to enable you to adapt and better identify opportunities to improve the risk profile of your portfolio.

Chris BakerResearch Specialist, Fixed Income Boutique

Katrina BowenConsultant, Oliver Wyman

14:30–15:10BREAKOUT SESSIONS 2

The Popularity of Diversified Growth Funds: Why is Australia Slow on the Uptake?

When it comes to new investment trends, Australia is often at the forefront of adopting new ideas. When it comes to Diversified Growth Funds (DGFs), however, this is not the case, with British funds leading the world in their take-up of DGFs in their investment portfolios. This session defines DGFs, discusses the pros and cons of their inclusion in multi-sector funds, and considers why their adoption in different parts of the world has diverged. We conclude with Mercer's views on whether DGFs will become a more or less important part of Australian fund asset allocations going forward.

Phil GrahamDeputy Chief Investment Officer, Pacific

Jordan NaultGlobal Leader for Hedge Funds

Technology in Retirement Savings

Over the next decade, the retirement savings industry will face a whirlwind of digital disruption that will reshape the competitive landscape. Traditional business models run the risk of being left in the dust. The rise of "FinTech" is creating new business models, and customer expectations are forever changed as a result. Successful industry players adapt their strategies in order to capture opportunities and meet changing consumer demands, while others face obsolescence.

In this session, we examine the FinTech phenomenon, explore "robo-advice" as a fundamental force at the centre of technology disruption, tour the leading innovators in retirement savings technology, and offer a set of strategic implications that no established industry player should ignore.

Georgina LeeConsultant, Mercer Retirement

Cambell HoltConsumer Marketing Leader, Financial Services, Pacific

Incentivising Insourced Asset Management Staff

The trend to insource asset management is on the rise; with many superannuation funds managing parts of their investments in-house (or contemplating such a move). In this breakout, we will explore the critical challenge of appropriately rewarding in-house investment staff. How can you compete for the talent you need and motivate them to deliver the performance you expect? Is it only about pay? This session include a case study that explores the incentive program of a US pension plan.

Sarah AzziResearch Specialist, Mercer Private Markets

Chris PerrittSenior Consultant, Mercer Talent

Surviving the Drought: Bond Market Liquidity in Tough Times

Substantial and much discussed evidence exists to suggest reduced bond market liquidity since the 2008 financial crisis. You may find yourself asking: is there a drought? How bad is it? How can I survive, or even thrive?

In this session, we canvass how and why bond market liquidity has been adversely affected in recent times. In addition, we detail what this means for both the asset manager and end investor and delve into a toolkit of survival measures to enable you to adapt and better identify opportunities to improve the risk profile of your portfolio.

Chris BakerResearch Specialist, Fixed Income Boutique

Katrina BowenConsultant, Oliver Wyman

15:10–15:40Networking and Coffee Break

If someone came up to you in the street and offered you free money with no strings attached, would you say “no thanks”? Free money is a real possibility in many parts of the superannuation industry. And yet, our research indicates that funds and members are missing out on potential gains due to operational inefficiencies and non-participation in low-risk, value-added strategies.

Trustees of superannuation funds rightly spend a great deal of time ensuring they have the optimum strategic asset allocation and strongly performing asset managers. However, with little additional effort and minimal extra cost and risk, funds can potentially enhance performance by considering some initiatives to gain additional returns and achieve operational efficiency. As such, now is the perfect time to explore other sources of returns and efficiencies in order to markedly improve outcomes.

Peter BakerMercer Sentinel™ Leader, Pacific

Sally CorbettHead of Transition Services

Tricia NguyenInvestment Operations Specialist, Mercer Sentinel™

16:10–17:00Bull or Bear? Three Topical Investment Issues

Is it time to buy within Emerging Markets? Should we worry about inflation or deflation? Can the Aussie dollar fall much further?

2015 marked a watershed moment as the prolonged period of "zero interest rates" in the world's largest developed economies was finally ended by the US Federal Reserve's lifting of rates on 16 December 2015. Will this also mark a turn in the tide for asset class performances? In this session, Andrew Kirton and Dave Stuart go head to head on these three important investment topics to enable you to decide whether you're a bull or a bear.

Dave StuartChair of Global Dynamic Asset Allocation and Chief Strategist for Mercer Funds, Pacific

Andrew KirtonInvestments Business Leader, EuroPac

17:00–17:10Closing Remarks

Ben WalshManaging Director & Market Leader, Pacific

18:00–21:30Cocktails and Off-Site Dinner

MARCH 3, THURSDAY

08:00–09:00Breakfast

09:00–09:10Welcome

Anthony SchiavoBusiness Leader, Mercer's Brisbane Office

09:10–10:10The New Frontier: Implications of an Aging Workforce

“The new frontier” consists of increased life expectancy, increased health expectancy, growth in human enhancement technology, and growth in information technology (Moore’s Law). Taken together, this means that western society is heading towards some major challenges that few policymakers are brave enough to address because they are far too focused on short-term issues. The ageing issue is often discussed in economic terms (“can we afford the elderly?”), but it should be seen in a wider social and technological context. Therefore, this presentation brings together some trends that are converging but are rarely drawn together in the public debate. A new narrative is required.

Dr Keith SuterManaging Director, Global Directions Think Tank

10:10–10:20Lightning Talk: Societal Risk – Millenials and Their Impact on Our Future

Millennials, the largest generation to come of age, have grown up in a different world with a different view to previous generations. What they know, think they know, and expect also differ significantly. For instance, millennials are demanding connectedness, instant access to individualised information, superior services, and attention to their own wellbeing. These expectations are already changing our world and will continue to do so.

Tatiana MesMarketing and Communications Manager, New Zealand

10:20–10:50Networking and Coffee Break

10:50–11:00Lightning Talk: Technological Risk – The Automation of Automotives

Feet off, hands off, eyes off, brain off — where will automotive automation end?

Self-driving vehicle technology is progressing at high speed, and driverless cars no longer exist solely the realm of science fiction. During the course of this Lightning Talk we bring you up to speed on the current state of play of driverless car technology and take you on a journey to the car of the future. The impact on our lives will be substantial, and the implications for investments may be greater than you think.

Cameron SystermansSenior Investment Analyst

11:00–12:00Building Portfolios to Better Achieve Long-Term Goals in Today's Short-Term World

A true long-term investor never loses sight of their long-term goals, and positions portfolios accordingly, to reflect perceived long-term risks and opportunities. The pragmatic long-term investor acknowledges, however, that the long-term is ultimately a series of short-terms, and their ability to meet long-term goals is heavily influenced by how effectively they manage the short-term i.e. capitalising on opportunities and responding to changing risk environments.

In this session, we discuss the evolving nature of risk management in diversified portfolios, the current perception of risks, and how investors should respond.

Russell ClarkeGlobal Chief Investment Officer, Mainstream Assets

Nick WhiteGlobal Director of Portfolio Construction Research

12:00–12:15Concluding Remarks

Simon EagletonInvestments Business Leader, Pacific

12:15–13:30Lunch

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