@Raoul Pal, relevant to your pensions and demographics work
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Interested to hear everyone's thoughts.....In a UK defined contribution company pension scheme, where members can only choose to allocate to a fixed set of investment funds, where would you be right now as someone with a time horizon of another 20yrs? (old millennial!)
My views (and hence the question)
- Allocations to most developed equity funds likely to underperform over the next decade.
- Some potential in certain EM equity markets but they likely have to take some pain first given reliance on USD debt and further COVID damage to their economies.
- Government bonds tied at/close to zero yield forever.
- IG Credit artificially supported by Central Banks. Not yet reflecting true solvency risk.
- Commercial real estate likely to move significantly lower due to economic downturn, behavioural changes and remote working.
- Cash/Deposits to provide close to zero return and eventually be inflated away.
- Commodities - No direct exposure offered in most schemes.
- Precious Metals - No direct exposure offered in most schemes. Fortunately some schemes offer access to a basket of Gold/Silver miners.
- Crypto - No direct exposure offered in most schemes.
A pretty grim set of choices for those looking to plan for the future. I know we have to take a view over our time horizon and a pension is a long one but there just doesn't seem to be many options that make sense right now. With the exception of potentially the miners, the investment set seems to offer little opportunity... (More)
begins today. He interviews Fredrik Nerbrand about how a country’s future growth pattern is inextricably linked with its demographic curve and how countries that can’t replace their working-age population face dire risks as their aging populations stop working and start replacing stocks with bonds in their portfolio.
Nerbrand is the chief investment officer of a family office and he and @Raoul Pal share how investors can prepare for these dangers, and how being aware of these risks is actually an opportunity in and of itself.
This is just the first installment of Raoul's multi-part journey into the economic impact of demographics. Stay tuned for part two...