Video transcript

Thomas Clarke: It's been a recurring observation that the coronavirus pandemic accelerated changes that were already taking place and pushed things further in the direction they were already going.

In my investment space, which is the top down capital market world, the same thing can be observed there. Central banks and the world's monetary authorities were already almost all very accommodative or stimulative, expansionary coming into 2020 and COVID-19 only made them ramp up their efforts even more aggressively almost everywhere.

The global capital market exists to facilitate the transmission of developments like these with respect to assisting and directing the allocation of scarce resources around the world, allocating them to where economic logic and societies interest indicates they are most needed, and markets tend to do this even if it can't see the developments coming ahead of time. It's socially beneficial, for example, that when governments need to issue significantly larger amounts of public debt that the willingness of investors to buy it is at a multi-decade historic high, which means that the cost to taxpayers of it being issued is at a multi-decade historic low. That kind of thing helps. But at the same time the evolution of these situations, the coronavirus pandemic throws up fundamental active investment risk taking opportunities as well, which it's my role as an asset manager to step into.

This last year and more has taken the price of some assets to levels of fundamental attractiveness, that means cheaper than they're worth, that are greater than we have seen for many, many years. At the same time it's pushed some prices to levels that are the most unattractive that we've seen for a very, very long time as well, much more expensive than they are ultimately going to be worth.

These are seismic shifts in the marketplace, they are huge swings away from long-term fundamental value, and as macro investors we want to observe them, understand them, figure out why they've happened, and ultimately take advantage of them for the benefit of our clients.

And as market prices move in accordance with changes in the macro environment—and the economic impact of the pandemic was a very, very significant change in the macro environment—this both facilitates the allocation of scarce sources of capital around the world and it creates opportunities for our portfolios and our clients to benefit from the ultimate gravitation back to fundamental value. Navigating this landscape is the core of what we do.