We like to use the otherwise wasted time at airport-departure gates to compile summaries of the recurrent questions in client meetings. AI, concentration and valuation are, unsurprisingly, a recurring theme, along with commodities and TIPS, reflecting a strategic inflation worry. We lay out the most common topics one by one below, along with our views on what investors should do about them.
In passing, we note that a couple of topics also come up that we won’t go into detail about in this note. Gold still surfaces in well over 90% of client meetings. Despite the ubiquitousness of the topic, when we asked if people hold it or not, it still very much depends where the investor sits in the financial ecosystem. Family offices and sovereign wealth funds own it, pension funds (pace a couple of honorable exceptions) don’t. We are still strategically bullish on gold despite the flat returns this year. Many more people will need to buy it, given the geopolitical and fiscal changes afoot! We discussed this in a recent note, so won’t go into it in this one.
Likewise, investors also frequently asked about private credit. We devoted a whole note to it recently, so we won’t bring it up here. We do note that investors are generally much more relaxed about granting private credit a role in institutional asset allocations now than earlier this year, recognizing the events of the first quarter as being about liquidity rather than a credit event per se.
The other point we won’t treat in detail here is regional allocation within equities. We met quite a few investors (in the US) who would, in theory, be interested in overseas exposure as a diversifier, and investors (in Europe) who would like to radically underweight the US in response to a raft of Trump-era policies. However, there was universal disbelief in the ability for European growth to accelerate in the near term. Investors seem content to hold large US equity positions, and the flow data bears this out. We agree and retain our strategic overweight in US equities.
