Populism increases, here to stay

19-May-2017

By Megan Tran

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Geo-political macro themes create uncertainty in the market, but fundamental ground work was the first step in identifying value and creating opportunities, according to William Blair.

Touring Australia from London, William Blair portfolio manager of dynamic diversified allocation (DDA) fund Thomas Clarke talked to media this week about the rise of populism and what it meant for currencies, global markets and investors, and how the company was managing these risks in portfolios.

Clarke said disruption in a world of uncertainty was a certainty and dictated by political factors like Brexit, US President Donald Trump and the recent French election.

He added that investors should decipher where the openings lay by asking: “Where are the opportunities?”

In addition, he said exchange rates in developed markets were less risky, while emerging markets were more risky, thus the key to making money was being on the right side to understanding exchange rates and where they are heading by “taking risks that are properly compensated”.

When it came to central banks, Clarke said they were doing “very uncertain” activities though their strategy has evolved over the past few decades.

Clarke also highlighted the concept of populism, which William Blair first incorporated in 2010 during the first Obama administration, when this theory took an anti-establishment stance.

According to William Blair, populism was a growing subject.

“It has remained relevant and will be for some time; you can’t write off populism,” Clarke warned.

He said this term was now mainstream, and while accepted in the industry, people were not sure what to do about it or how it influenced exchange rates.

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