Agility is key to navigating today's complex investment landscape

Is behaving like a hedge fund the answer to successfully navigating global markets? This was one of the key topics explored by Ontario Teachers' CEO Jo Taylor during his opening keynote at the Financial Times Future of Asset Management North America Summit. During the recent event held in New York, Taylor sat down with Harriet Agnew, the publication's asset management editor, to discuss the global economic outlook and the key challenges and opportunities that international investors face.

“As an international investor it is a very complicated landscape at the moment and the populism and politicization of the world is as strong as I have ever seen it," he noted, adding that an agile investing approach is critical. Below are Taylor's key points on managing economic uncertainty, identifying global investment opportunities and attracting the right talent.

What are some of the biggest challenges facing international investors today?

Jo Taylor: Higher inflation rates continue to persist. Should this continue, it may lead to further interest rate hikes in the near term, which will make it harder for firms to generate returns. Combined with the prevailing geopolitical backdrop, the current environment is likely to remain challenging in the short and medium term. However, as a long-term focused global investor, we are well equipped to navigate these complexities.

What have been some of the ways you’ve been tackling economic headwinds?

JT: Many say we behave more like a hedge fund than a traditional pension plan because we move capital between our different asset classes very deliberately and quite significantly. For instance, at the outset of 2020, nearly 50% of our balance sheet was in fixed income, but by the end of the year, it stood at zero. We reallocated the best part of $120 billion into other asset classes.

We have also accelerated our credit activity. Some of these opportunities have been in private equity-style deals. We're also in strategic discussions with banks interested in outsourcing their credit to a third party to increase their capacity for new lending.

How does Ontario Teachers' foster and grow its talent in today's competitive environment?

We foster a strong culture of continuous learning to help our talent, including recent graduates and interns, grow throughout the organization. We also promote a culture of experimentation and empowerment. Ontario Teachers' is a fun workplace where we work on a lot of exciting initiatives and give people responsibility relatively early on to gain the hands-on experience they need to grow their careers.