Mercer Global Investment Forums 2018

MUNICH11 - 12 October 2018

Forum Agenda

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10 OCTOBER, WEDNESDAY

15:45–16:30Fund Manager Session Registration

16:30–18:45Fund Manager Session

19:00–21:00Welcome Reception and Buffet Dinner

11 OCTOBER, THURSDAY

07:00–08:45Breakfast

08:45–08:55Welcome & Opening

Martin HaepWealth Business Leader, Germany

08:55–09:00MC (Day 1)

Annica WoronowiczLead Investment Management Specialist

09:00–09:50Investment Themes and Practical Application

With the global economy in the midst of a widespread upswing in growth, what do the next few years hold in store? In this session, we set out our investment themes for 2018 and beyond, which we believe will present both challenges and opportunities as well as drive change in the investment landscape. We outline major issues impacting different investors around the world, and invite you to raise the key investment challenges you are facing for the panel to address.

Deb ClarkeGlobal Head of Investment Research

Panel

Kishen GanatraEuropean Director, Strategic Research

Annabel MathiesenSenior Investment Consultant

Herwig KinzlerHead Investment Consulting, Germany

09:50–10:05Mind Games 2.0 – Round 1

In 2017, Forum delegates participated in the Mind Games to achieve the highest portfolio returns based on asset allocation; 2018 will be about investing with style. In order to win, delegates must now understand the behaviour of risk premia as they evolve through time. Go on a digital odyssey to three scenarios set in the future and take up the challenge to invest successfully. The game involves table discussions and the chance to create new portfolios with an eye to getting to the top of the leader board and winning a surprise gift.

Gergana PetrovaInvestment Analyst

10:05–10:35Networking and Coffee Break

10:35–11:35Keynote Address (Day 1)

Katya AdlerEurope Editor, BBC News

11:35–11:45Lightning Talk: Cryptocurrencies – Bitcoin and Beyond

In 2010, an individual bought two large pizzas in exchange for 10,000 Bitcoins in what is believed to be the first cryptocurrency transaction. By the end of 2017, a single Bitcoin was worth over $14,000 and Bitcoin had a market capitalisation higher than New Zealand's economy. So, what lies ahead for the future of cryptocurrencies? With the substantial rise in value, will a practical use for cryptocurrency beyond speculation be established? Could this therefore represent a new asset class?

In this lightning talk, we discuss the truths and myths surrounding cryptocurrencies. We examine the underlying blockchain technology, and looking beyond Bitcoin we also outline how other digital currencies have performed. Finally, we set out the developments in regulatory response and practical applications for financial institutions.

Lushan SunInvestment Consultant

11:45–12:30Does our Industry Remain Fit for Purpose?

The asset management industry is part of a wider savings and investment eco-system. In the eyes of many, this industry is malfunctioning. The charge is that it is increasingly remote from end savers (who are the ultimate providers of the capital), fraught with agency issues and failing in its central role as an effective allocator of capital. In this session we consider the key challenges facing the industry, and discuss what can be done to ensure the industry remains fit for purpose.

Rich DellGlobal Leader, Equity Boutique

Divyesh HindochaSenior Investment Consultant

12:30–12:40Mind Games 2.0 – Round 2

In 2017, Forum delegates participated in the Mind Games to achieve the highest portfolio returns based on asset allocation; 2018 will be about investing with style. In order to win, delegates must now understand the behaviour of risk premia as they evolve through time. Go on a digital odyssey to three scenarios set in the future and take up the challenge to invest successfully. The game involves table discussions and the chance to create new portfolios with an eye to getting to the top of the leader board and winning a surprise gift.

Gergana PetrovaInvestment Analyst

12:40–13:55Lunch

13:55–14:20Responsible Investment Solutions - Initiatives and Implementation

Responsible Investment was established over a decade ago, but recently there has been a meaningful shift, with investors asking 'why not?', not 'why?' , and regulators clarifying fiduciary duty consistency. But what happens going from 'on paper' research / advice to 'in practice' implementation? This session brings together the RI consultant with the Portfolio Management practitioner to demonstrate the challenges and benefits in implementing four RI approaches: integration, stewardship, thematic investing, and exclusions. Clients, asset managers, and Mercer staff alike should benefit from these 'walking the talk' examples.

Jan-Hein van den AkkerPortfolio Manager

Jillian ReidInvestment Consultant

14:20–14:30Lightning talk: Social Systemic Issues - New Lenses And Blind Spots

Today there are 250 million migrants on the move, of which 65 million are refugees. Drawing on the World Economic Forum Global Risks report and Mercer climate change research, this lightning talk asks questions such as "Are we really understanding the connections between global social issues like migration on social and economic stability?", "Are investors at risk of having blind spots, not recognizing that social systemic issues are already impacting economies, governments and companies the world over?", "Do these issues impact sovereign risk and mean headwinds for equities?" We suggest that, as long-term investors, there are ways of assessing social issues and share ideas on tools and indicators for addressing them.

Inge WestInvestment Consultant

14:30–15:15BREAKOUT SESSIONS 1

Mercer Question Time: You Ask, We Answer

Here is a chance to ask a panel of Mercer investment consultants your questions on the major investment issues that you are facing. We start off by setting out our ideas and insights on some of the issues and challenges raised in the discussions during the 2018 Investment Themes and Practical Application session. We then open it back up to the audience for more questions.

Facilitator

Joanne HoldenChief Investment Officer, UK

Panelists

Garvan McCarthyChief Investment Officer Alternatives, Europe

Steve TurnerSenior Investment Consultant

Carl-Heinrich KehrSenior Investment Consultant

The Viability Of Collective Defined Contribution (CDC)/ Defined Ambition

Around the world, defined benefit plans are in decline as employers seek to reduce and control costs and risk. However, defined contribution plans are proving no less challenging as a sustainable pension system as individuals struggle to reach their retirement goals. Adequacy, investment and longevity risks are not well understood or managed, either before or after "retirement".

CDC points to a third way, with an ambition to provide members with more predictable benefits than conventional defined contribution plans, but with lower risk and more manageable costs for the employer than defined benefit plans. Yet these plans are not immune from the risks that have undermined other pension systems. So what design, governance, funding and investment measures might need to be in place to make CDC a success? In this session we share our international experiences with CDC plans and open the debate on whether CDC is friend or foe for plan sponsors, governance bodies and members.

Marc HeemskerkSenior Client Management/Development Consultant

Tessa PageSenior Investment Consultant

Current Investment Opportunities – A Tailored, Systematic and Dynamic Approach

At Mercer we believe asset allocation is the most important decision an investor can make. We do not believe in a one size fits all policy. Our clients all have different objectives, risk tolerances, time horizons and governance capabilities. This breakout session is designed to highlight how we build reference portfolios for our client base, how our Dynamic Asset Allocation process provides tilts to these portfolios and set out our current views on dynamic investment opportunities.

Paul CavalierGlobal Leader, Fixed Income Boutique

Lucy TusaSenior Investment Consultant

A How-To Guide to Reducing Risks

Nearly a decade has passed since the financial crisis, potentially lulling investors into a false sense of complacency. However, an extended bull market has resulted in elevated equity valuations, suggesting lower expected returns from stocks. At the same time, rising interest rates and tighter monetary policy introduce risks into fixed income markets. Additionally, the geopolitical environment remains uncertain, which can lead to significant spikes in volatility as we have seen this year. How should investors measure risk today and is it necessary to take a more holistic view on risk?

In this session, we explore different definitions of risk, approaches to reducing risk and the trade-offs associated with those approaches. Given market dynamics, we think it is appropriate to review risk management practices now rather than waiting until the next bear market has hit.

Jeffrey DissmannSenior Investment Consultant

Chris AustinSenior Investment Consultant

15:15–15:45BREAKOUT SESSIONS 2

Mercer Question Time: You Ask, We Answer

Here is a chance to ask a panel of Mercer investment consultants your questions on the major investment issues that you are facing. We start off by setting out our ideas and insights on some of the issues and challenges raised in the discussions during the 2018 Investment Themes and Practical Application session. We then open it back up to the audience for more questions.

Facilitator

Joanne HoldenChief Investment Officer, UK

Panelists

Garvan McCarthyChief Investment Officer Alternatives, Europe

Steve TurnerSenior Investment Consultant

Carl-Heinrich KehrSenior Investment Consultant

The Viability Of Collective Defined Contribution (CDC)/ Defined Ambition

Around the world, defined benefit plans are in decline as employers seek to reduce and control costs and risk. However, defined contribution plans are proving no less challenging as a sustainable pension system as individuals struggle to reach their retirement goals. Adequacy, investment and longevity risks are not well understood or managed, either before or after "retirement".

CDC points to a third way, with an ambition to provide members with more predictable benefits than conventional defined contribution plans, but with lower risk and more manageable costs for the employer than defined benefit plans. Yet these plans are not immune from the risks that have undermined other pension systems. So what design, governance, funding and investment measures might need to be in place to make CDC a success? In this session we share our international experiences with CDC plans and open the debate on whether CDC is friend or foe for plan sponsors, governance bodies and members.

Marc HeemskerkSenior Client Management/Development Consultant

Tessa PageSenior Investment Consultant

Current Investment Opportunities – A Tailored, Systematic and Dynamic Approach

At Mercer we believe asset allocation is the most important decision an investor can make. We do not believe in a one size fits all policy. Our clients all have different objectives, risk tolerances, time horizons and governance capabilities. This breakout session is designed to highlight how we build reference portfolios for our client base, how our Dynamic Asset Allocation process provides tilts to these portfolios and set out our current views on dynamic investment opportunities.

Paul CavalierGlobal Leader, Fixed Income Boutique

Lucy TusaSenior Investment Consultant

A How-To Guide to Reducing Risks

Nearly a decade has passed since the financial crisis, potentially lulling investors into a false sense of complacency. However, an extended bull market has resulted in elevated equity valuations, suggesting lower expected returns from stocks. At the same time, rising interest rates and tighter monetary policy introduce risks into fixed income markets. Additionally, the geopolitical environment remains uncertain, which can lead to significant spikes in volatility as we have seen this year. How should investors measure risk today and is it necessary to take a more holistic view on risk?

In this session, we explore different definitions of risk, approaches to reducing risk and the trade-offs associated with those approaches. Given market dynamics, we think it is appropriate to review risk management practices now rather than waiting until the next bear market has hit.

Jeffrey DissmannSenior Investment Consultant

Chris AustinSenior Investment Consultant

15:45–16:15Networking and Coffee Break

16:15–16:25Lightning Talk: How To Assess Capacity Levels In Different Strategy Types

History contains many examples of where unfettered asset growth has derailed the return profiles of very successful strategies that had previously delivered strong positive performance for clients. Effective management of capacity is essential to the sustainability of any investment proposition, but one that is often overlooked, especially in the good times. In this session we will examine some cautionary tales of the peril that resulted from insufficient attention being paid to the important area of capacity management.

Gareth AndersonResearch Specialist, Equity Boutique

16:25–17:05Debate: Is Inflation Ever Coming Back? The Implications for Strategic Asset Allocation

Our annual debate is back! Some members of the audience may recall the chaotic inflation of the '70s, when rampant price increases around the world decimated living standards and left investors with substantial losses across most asset classes. However, since 1980 inflation has been on a steady downtrend and post the GFC, deflationary threats have replaced inflation as central banks' main preoccupation. Will structural disinflation prevail, or is inflation likely to return to haunt markets? Our customary protagonists, Andrew Kirton and Rupert Watson will attempt to persuade you of the merits of their respective view points on this topic, whose resolution may have a profound impact on asset class returns.

Andrew KirtonGlobal Chief Investment Officer

Rupert WatsonHead of Asset Allocation, Delegated Solutions

17:05–17:20Final Remarks

Cäcilia LugauerConsultant, Mercer Germany

18:00–22:00Drinks and Offsite Dinner

12 OCTOBER, FRIDAY

08:00–09:00Breakfast

09:00–09:05MC (Day 2)

Pascal GoettmannSenior Sales Leader Investment Solutions, Germany

09:05–10:05Keynote Address (Day 2): Technology and the Future of the Finance Profession

Dr Susskind discusses how technology will transform the finance profession, drawing on his best-selling book, co-authored with his Richard Susskind, The Future of the Professions. It sets out two futures for the finance industry. Both rest on technology. One is reassuringly familiar. It is a more efficient version of what we have today. The other is transformational – a gradual replacement of professionals by increasingly capable systems.

Dr. Susskind also explores the decline of today's professions and discuss the people and systems that will replace them. In an Internet society, the professions will look remarkably different from today, and we will neither need nor want finance professionals – or accountants, doctors, teachers, architects, lawyers, the clergy, consultants, and many others – to work as they did in the 20th century.

Dr Daniel SusskindFellow in Economics, Oxford University

10:05–10:30Understanding the Evolution of the Fixed Income Opportunity Set and Making it Work for You

This session provides an overview of the state of affairs today, how the fixed income landscape has evolved over time and, importantly, how modern fixed income strategies can help meet future requirements for protection and growth. While it is difficult to predict the future, we know that there is bound to be volatility ahead but the key is to construct a resilient foundation. Join us to learn why we believe modern fixed income strategies have an essential role to play in building your house on the strongest foundation.

Noel CollinsResearch Specialist, Fixed Income Boutique

Trevor LinPortfolio Manager, Delegated Solutions

10:30–11:00Networking and Coffee Break

11:00–11:25Five-Year Outlook: Opportunities in Real Estate

With investment volumes at new record highs in many markets, real estate more than ever plays a critical role in institutional portfolios. Being now about nine years into a bull market, however, a cautious and selective approach seems to be warranted. This session examines how to approach the asset class from a strategy perspective, discussing risks and benefits of a yield-focused strategy versus a more pronounced focus on value-creation in today's market. We also debate where to invest geographically by challenging whether or not international diversification provides a real benefit, and finally draw out what broader trends mean for the attractiveness of certain property segments.

Markus LaitenbergerPrincipal, Senior Manager Research Consultant

Julia SchifferPrincipal, Real Asset Specialist, Zurich

11:25–12:05Private Markets Superstar: Overcoming 'Hurdles' to Investment Success

The environment of continued low interest rates has been one of the driving forces behind the increasing prominence of private markets in recent years. There are, however, hurdles, such as high valuations, fees, complexity and varying levels of transparency. In this interactive session, four asset class specialists each argue how a specific alternative asset class can overcome or compensate for these hurdles. You get to ask questions and vote for the most convincing presentation.

Moderator

Tobias RipkaSenior Investment Consultant

Presenters

PRIVATE EQUITYZeenat PatelAlternative Product Specialist/Client Portfolio Manager

INFRASTRUCTUREAmarik UbhiAsset Class Specialist, Mercer Private Markets

PRIVATE DEBTAshley KnightPrivate Equity & Debt Specialist

12:05–12:15Mind Games 2.0 – Round 3

In 2017, Forum delegates participated in the Mind Games to achieve the highest portfolio returns based on asset allocation; 2018 will be about investing with style. In order to win, delegates must now understand the behaviour of risk premia as they evolve through time. Go on a digital odyssey to three scenarios set in the future and take up the challenge to invest successfully. The game involves table discussions and the chance to create new portfolios with an eye to getting to the top of the leader board and winning a surprise gift.

Gergana PetrovaInvestment Analyst

12:15–12:35Plot a Route to Success in This Extended Cycle

In this session, we bring together the various themes and topics highlighted over the course of the Forum. We put forward suggestions for how you as investors can build these into a fiduciary calendar for the year and ultimately help you plot a route to success in this extended cycle.

Niall O'SullivanChief Investment Officer for Delegated Solutions, Europe

12:35–13:50Lunch

Draft Agenda. Subject to change.
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