How expert investors navigate Covid-19

By Michelle Schriver | October 27, 2020 | Last updated on December 19, 2023
4 min read
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Investing challenges and opportunities arising from the pandemic were discussed by an expert panel at the annual Toronto Global Forum on Monday. The virtual event was organized by the International Economic Forum of the Americas.

A fundamental investing challenge heightened by Covid-19 is figuring out where bonds fit in a portfolio as global yields drop and bonds offer less protection against equities.

“The average client portfolio is riskier today than it has been historically because you’re not getting the natural diversification” that bonds provide, said panellist Luke Ellis, CEO with London, U.K.–based Man Group plc, a global investment management firm with offerings that include quantitative portfolios. As a result, asset allocation must be reconsidered, he said.

Ellis also warned of the challenge of identifying winners and losers in a world of massive government spending. The market is not efficient when fiscal policy helps support weak companies, he said.

Neil Cunningham, president and CEO with Ottawa-based PSP Investments, one of Canada’s largest pension investment managers, said PSP is reducing government bonds in portfolios in favour of emerging market debt, private credit and high inflation–linked infrastructure projects with little operating or credit risk. Adding in these assets increases risk, so the firm reduces equities to stay within risk limits, he said.

More generally, as a long-term investor, Cunningham aims to distinguish between noise and longer-term trends. The U.S. election, he said, is noise: “We’re much more concerned with the trends that get accelerated by Covid,” such as de-globalization, greater e-commerce adoption and working from home.

Cunningham also suggested investors follow the long-term trends of ESG and diversity and inclusion because governments, employees and customers will consider these factors as they legislate, work and shop.

Mohammed Alardhi, executive chairman with Manama, Bahrain–based Investcorp, a global manager of alternatives, highlighted the need to diversify within sectors and geographies, noting that investors in oil-producing regions were particularly hard hit by the pandemic.

Cunningham described investing in a U.K. pub business just months before the economic shutdown. No one expected a business that stayed open during the Blitz to close, he said. The lesson: “Unless you diversify both geographically and by sector, you’re bound to get hit by something you didn’t expect.” Unexpected downturns also require investors to ensure they have sufficient liquidity, he said.

Panellists also considered trends arising from geopolitics.

The outcome of U.S.-China tensions will be key for many portfolios over the next decade, depending on the position investors take, Ellis said.

For example, should China be a small part of a portfolio because of the country’s restrictions on foreign businesses, or should it be a large part as the eventual largest economy in the world?

As U.S.-China tensions put pressure on other governments to pick a side, investors will face an increasingly challenging environment, Ellis said.

Cunningham said his firm was increasing allocations to Australasia and emerging markets based on long-term geopolitical trends that will see those economies benefit.

The outlook for investment in Canada

Ian McKay, CEO with Ottawa-based Invest in Canada, also spoke at the session and provided a positive outlook for foreign investment in this country despite an overall negative forecast for foreign investment flows.

Global foreign direct investment (FDI) is expected to decrease by up to 40% this year and by a further 5–10% in 2021, according to the World Investment Report 2020 from the United Nations Conference on Trade and Development.

This would bring FDI flows to “the lowest levels we’ve seen in over 20 years,” McKay said, which will motivate governments, investment funds and agencies to reassess their strategic plans and investing criteria.

As they do so, Canada is proving attractive.

Since the pandemic, Invest in Canada has experienced a spike in interest from global investors in three sectors in Canada: life sciences, associated with a vaccine for Covid-19; the digital economy, in which Canada is a leader in artificial intelligence; and clean technology, such as hydrogen or electric cars and renewable energy.

“In Canada, we have the right ingredients for that — the raw materials, highly skilled workforce, innovative ecosystems and global market access,” McKay said.

Fundamental factors also favour Canada when it comes to attracting investment, such as political and economic stability, an open mindset to free and rules-based trade, and a global supply of workforce talent, McKay said.

Despite the forecast for foreign investment flows, “we are certain that the future is bright for those investors who continue to build and expand their operations in Canada,” McKay said.

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Michelle Schriver

Michelle is’s managing editor. She has worked with the team since 2015 and been recognized by the National Magazine Awards and SABEW for her reporting. Email her at