European Investment Conference

1. Higher rates and the increased cost of capital will slow the global economy. The main question is whether there is sufficient synchronization of a credit cycle to set off a major recession.

2. It is important to stress that a changing environment does not change our investment framework. We look for quality companies in which we have insights into improving economic returns in the future, and we do not pay too much for them. This framework is well suited for a changing world, but it requires the resources to recognize where change is happening.

3. The portfolio is balanced across sectors and factors, with the goal of maximizing capture ratio, hedging exogenous geopolitical shocks while allowing us to still focus on idiosyncratic stock picking. We are especially excited about AI which will bring about a profound change across the global economy, with opportunities for significant value creation.

1. China’s initial economic rebound following the end of its zero-covid policy has proved weaker than expected. Meanwhile, concerns over real estate and demographics have also hindered relative performance.

2. Despite a slower-than-expected cyclical recovery, many Chinese companies are experiencing improving fundamentals and are well positioned to gain market share. Discovering the future winners early in their cycle and capitalizing on inefficiencies can potentially lead to outsized alpha generation.

3. China remains a deep market, and it is crucial to go beyond the crowded names, where the hidden gems are likely to be found. Investors need a multidimensional framework to be able to capture different areas of opportunities. We are focused on three themes: (1) compounding growth; (2) nonlinear growth; and (3) special situation characteristics.

1. Fundamentals are positive for emerging markets (EM) bonds. Disinflation is taking hold in many EM economies enabling central banks to pause, or even cut interest rates. Further U.S. dollar weakness will help support EM economic growth.

2. EM bond yields are at levels not seen since 2008, and we continue to find instances of mispricing. EM corporate credit notably offers a significant spread pick-up relative to similar-rated US credit, despite comparable default rates over recent years.

3. Some EM economies do deserve caution following sharp monetary tightening, but this may lead to a process of “creative destruction”, resulting in an upturn in fortunes in the years ahead. Ultimately, EMs remain a highly heterogeneous, diversified asset class, for which experience is invaluable, and a selective and active approach essential.

1. As the scale and scope of the environmental and social issues confronting the world become ever more apparent, so too does the need for impact investing. Fixed income investors have a key role to play in addressing the growing shortfall in investment required to address global challenges.

2. Public fixed income markets offer a fertile ground for impact investment opportunities and can facilitate the flow of capital from investors directly to the very projects and institutions that we believe are best placed to drive positive environmental and/or social impact. Investors can also help shape and drive positive impact outcomes through engagement with companies.

3. The opportunity set for impact credit continues to grow and evolve in increasingly interesting ways. Over the last year, we have made our first investments in newly emergent biodiversity-linked and blue bonds, which we expect to become a more prominent feature of the market, along with other innovations across the impact landscape.

1. There has been increased concerns over environmental, social, and governance (ESG) policymaking and implementation. We have seen challenges arise to the shared objective of improving ESG standards—in corporate behavior, security research, and reporting dimensions.

2. While this backdrop has been challenging for many values-based investors, we believe that impact investing can help address many of these concerns by demonstrating clearly defined measurement frameworks that help reduce the scope for greenwashing.

3. Importantly, we believe the opportunity to own businesses that can create a positive environmental or social impact is greater than ever before in public equity markets. Being on the right side of this societal and environmental change creates a real opportunity to select stocks that will convey a positive impact profile and, with it, the added return potential that this can bring.

1. Markets are facing a “peak moment” on multiple fronts (inflation, fiscal policy, interest rates, global liquidity, employment). This is happening as China, the world’s second largest economy, is entering a prolonged slowdown, and will likely fail to provide the safety net to global growth that it has in the past.

2. The U.S. Treasury has started to issue debt to rebuild cash balances, while Japan is also looking to tighten monetary policy. Major central banks have raised interest rates aggressively and continue to hike despite increased signs of economic weakness. These signs of draining liquidity point to a more volatile period ahead.

3. The market is pricing in a soft landing for the global economy, but we believe that will be difficult to achieve. The Dynamic Global Bond Strategy is focused on mitigating volatility and providing ballast in times of market upheaval.

1. The increased uncertainty and volatility that has characterized equity markets over the past two years is likely to persist. Amid this more challenging backdrop, nominal returns from equity markets are likely to be lower moving forward. Generating outperformance will be harder to achieve.

2. For true stock picking investors, this is a positive landscape as company valuations and fundamental strengths come back into focus. This is where an all-cap remit is also advantageous, providing the flexibility to find quality, alpha generating, businesses, from across the entire U.S. market cap spectrum.

3. The US All-Cap Opportunities Equity strategy is designed as an ‘all weather’ portfolio. Underpinned by a unique ‘four-pillar’ investment framework, the strategy aims to deliver consistent outperformance throughout the cycle and in all manner of market conditions.