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Articles by Henry Maxey
Correlation dilemma gives liquid alternatives their time in the sun
What if the breakdown of the negative bonds-equities correlation in 2022-2023 was not an aberration, but a return to the positive correlation that prevailed as recently as 1980–2000? Andrew Harrex, managing director, Australia and New Zealand, at P/E Investments, posed this question to The Inside Network’s Alternatives Symposium. If so – and P/E Investments believes it is – “investors are going to need another diversifier,” Harrex said.
Not the GFC, but investors are 'career-ing' into liquidation
The rapid demise of Silicon Valley Bank (SVB) – the second-largest US bank failure in history – has caught markets by surprise. It would be comforting to focus on the specific weaknesses of a business model. Isn’t this just an unfortunate combination of a bank with too much interest-rate risk on the asset side meeting herding behaviour by a homogeneous group of depositors? These are certainly features that made SVB’s tinder particularly dry.
Funds back affordable housing, ‘critical’ HAFF change
Home / News / Funds back affordable housing, ‘critical’ HAFF change While funds have backed affordable housing as an asset class, nation-building initiatives like the Housing Affordability Future Fund (HAFF) still need tweaks to create certainty for institutional investors.
Career-ing into liquidation
The rapid demise of Silicon Valley Bank (SVB) – the second-largest US bank failure in history – has caught markets by surprise. It would be comforting to focus on the specific weaknesses of a business model. Isn’t this just an unfortunate combination of a bank with too much interest-rate risk on the asset side meeting herding behaviour by a homogeneous group of depositors? These are certainly features that made SVB’s tinder particularly dry.
Super funds shouldn’t hold back on data
Home / News / Super funds shouldn’t hold back on data Super funds are sticking with the ‘best endeavours’ approach to the Superannuation Data Transformation program. But in giving less information, they’re going to get less back. The Superannuation Data Transformation program launched in 2019 aims to standardise the flow of information between APRA and the industry it regulates. It’s a framework across fees and costs, asset allocation, expenses and insurances and most of the other financial pieces.
Is investing for higher inflation a poisoned chalice?
Increasing inflation volatility represents the greatest challenge to investors for a generation. A new regime and the collapse of the financial market status quo requires us to reimagine portfolios. No longer can we rely on yesterday’s logic. “Inflation is the endgame. Just brace for inflation volatility first.” This was the punchline of my 2021 Ruffer Review article. Do we still believe inflation volatility will be the primary feature of the next few years?
Jurassic risk and the chomping of the traditional balanced portfolio
The death of inflation has been greatly exaggerated. Its return will first scare, then maim, then ruin the traditional balanced portfolios have that served investors well for a generation. Investors need to prepare for a world of greater inflation volatility. And with it a monumental risk—bonds and equities falling in tandem. Investors’ great fear A great fear stalks the land of asset management—the return of inflation.
Jurassic risk
Henry Maxey Chief Investment Officer 2 March 2021 The death of inflation has been greatly exaggerated. Its return – perhaps as 1970s-style T-Rex or 2020s genetically-mutated velociraptor – will first scare, then maim, then ruin the traditional balanced portfolios that have served investors well for a generation. Investors need to prepare for a world of greater inflation volatility. And with it a Jurassic risk – bonds and equities falling in tandem.
Dismantling the deflation machine
Seeking to escape the inflation of the 1970s, policymakers have inadvertently engineered an equally powerful deflation machine. Over the past 30 years, this has been mightily reinforced by the transformation of China’s economy and the impact of technology. Today, a financial system that is structurally intolerant of inflation faces a changing political-economy regime that makes inflation inevitable. The markets have wired themselves to the wrong inevitabilities.
Behind the illusion of stability
This is the first of two white papers published by our chief investment officer, Henry Maxey, on the current investment climate and where we see the risks. The second paper, Dismantling the Deflation Machine, will be published in March. The epicentre of risk in the financial system has moved. In 2008, it was leverage in the banks. Today, the equivalent risk is in the asset management industry, where a series of interlocking factors have come together to make markets increasingly ‘avalanche prone’.
Henry Maxey
Henry Maxey joined Ruffer in 1998 after graduating from Oxford University with a first class honours degree in economics and management. He became a CFA charterholder in 2003. He managed the LF Ruffer Total Return Fund and LF Ruffer Equity & General Fund between 2001 and 2006. He joined the executive committee in 2006 and became chief investment officer in 2010. Between 2012 and 2017 he combined this role with that of chief executive.
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