The emerging disruptive forces of technological, political and demographic change threaten to destabilise long-term investment performance. It will take special kind of capacity building and flexibility for institutional investors to benefit from disruption rather than fall prey of it.
We live in an age of unprecedented confluence of multiple disruptions. First, there is a generation of twenty-somethings set on disrupting virtually every industry using technology that did not exist or was too expensive a few years back, some of them succeeding in the process. Then there is the macroeconomic disruption brought by ageing population, stagnant productivity. There is the political disruption of Trump, Brexit and all the rest of isolationist and populist tendencies – evidence suggests that reversal of globalisation is progressing fast. Of course, the environmental disruption is hard to ignore. These trends happen very quickly in the historical context and reinforce each other.
What is the implication for the investment policy, if any? In the first issue of the Risk Wire this year, we attempt to take stock of all these disruptive trends and draw some conclusions in terms of the appropriate policy response.