- Chief Executive Officer, Managing Partner, and Portfolio Manager
United Kingdom, Intermediary
Change
The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
At a crossroads: On turbulence, change, and rethinking rules of thumb
At this time of immense geopolitical turmoil and human struggle and suffering, I want to begin by expressing my sincere wish for brighter days in 2024. World events are having widespread effects on clients, companies, and countries we work with, and I hope all are managing through these unsettling times. I want to offer a note of optimism as well, as I believe we are also living in an age of unparalleled innovation and human ingenuity that will help us overcome the challenges ahead. As an investor in the health care sector for more than 30 years, I’ve seen firsthand how determination, ambition, and purpose can drive enormous change, and it gives me great confidence in the future.
At Wellington, we seek to be a source of stability and confidence — a partner to be relied on by our clients as they navigate a volatile market and economic environment. In this year’s letter, I’d like to put that environment in perspective, as it marks a dramatic departure from the relative stability of the post-GFC era, and share some thoughts on how we’re focusing our firm to support clients’ needs.
A very different investment landscape
In 2023, financial markets certainly bounced back from the historically challenging results of the year before, when both equities and bonds struggled. At the same time, we seem to be in an environment where investment “rules of thumb” about how economies and markets behave are open to question. The recession forecasted by so many hasn’t arrived, at least not yet. This era of extreme market concentration, marked by the dominance of the “Magnificent Seven,” has continued to defy expectations. And advances in artificial intelligence (AI) have quickly begun to fundamentally alter how many view the future of the global economy and to disrupt a wide range of industries.
Meanwhile, 2023 brought more evidence of regime change, with members of our Macro team continuing to argue that with the end of the “easy money” era and the unwinding of globalization, we should expect shorter and more frequent economic cycles, structurally higher and more volatile inflation, and greater differentiation in countries’ policy decisions and economic outcomes. As a result, we expect uncertainty about the economic outlook, including around interest rates and markets, to remain a dominant theme this year, underpinning decisions many asset owners will make about the deployment of capital and the positioning of portfolios.
Amid so much change, asset owners should look for portfolio managers who adopt and follow a strong philosophy and process, but who are also unafraid to ask tough questions, listen to alternate viewpoints, and challenge their assumptions when necessary. Asset owners should also expect their managers to be prepared for evolving economic and industry conditions with the research depth and breadth that such a complex world requires.
How we’re working to help clients manage the risks and opportunities
It is in times like these that our collaborative culture truly shines, helping our investment professionals stress test their ideas and identify opportunities for clients, as they’re doing today in areas like fixed income, private markets, emerging market equities, and many specialized thematic strategies. Our teams are engaged in vigorous discussion and debate about the topics that are driving markets, economic policy, and portfolio decisions, including key geopolitical risks, the outlook for interest rates, the economic impact of AI, the global implications of the energy transition, and the outlook for China, to name a few.
In this environment, I see great excitement among our investment professionals in the potential of active management. Separating the winners from the losers and identifying equity and bond issuers with strong fundamentals versus those with more challenged balance sheets or outlooks is at the core of what we seek to do — the benefit of Wellington’s robust investment in deep research across all major asset classes.
There are also benefits to scale in our industry, and as one of the largest active managers globally, we continue to add capabilities to better serve our clients, including in areas such as private equity, private credit, and market-neutral long/short strategies, as well as talent that helps us manage solutions across assets, themes, and factors. We’re also building out capabilities that support our investors, including investor development, where we have a dedicated and growing team using data and evidence-based analysis and content to help drive skills development at all levels of our platform.
Given the rapid pace of technological advancements, we founded an internal network this past year to focus on new and emerging technologies and to explore how best to apply capabilities to create value for our clients. We have long used AI technologies to enrich our investment process, including applying natural language processing to find patterns in earnings reports, job listings, and more. Now, generative AI promises to help supplement and advance our existing efforts while also enabling new efficiencies across a broad range of firm functions such as portfolio risk analysis and trading.
We continue to believe that understanding the financial effects of sustainability risks and opportunities on issuers is a critical capability for the future of active asset management. Our industry is facing a complex global regulatory environment and I think we are well positioned to navigate it given our investment-led approach.
We also believe that a diverse workforce, equitable opportunities for all colleagues to reach their full potential, and an inclusive culture are critical to attracting and retaining the talent we need to drive excellence for our clients. Like others in our industry, we are working to address skill building and advancement, and to measure qualitative and quantitative outputs and outcomes.
Keeping clients at the center of everything we do
From the outset, the founders of our firm ensured there was a clear and unwavering focus on putting clients first. It’s in the mantra that still guides every decision we make: Client, firm, self. To ensure we’re positioned to be an effective partner to clients, we seek out feedback and observations on what we are doing well and where we could do better. As many of you know, we conducted a client survey in 2023, and I’d like to thank all of you who took the time to share your thoughts. We were deeply gratified by the trust you expressed in our firm and people. We were also motivated by many of your suggestions, including a desire to hear more proactively from us, especially during times of market stress and organizational change, and to see ongoing improvement in our reporting and our digital experience. We are a continuous feedback culture and will be actively working to address your input.
We were also excited to see more clients in person again in 2023. While in-person meeting activity is not back to pre-pandemic levels, as many find benefits in virtual engagement, we have greatly enjoyed and appreciated the chance to meet clients face to face around the world. I certainly traveled more in 2023, and found clients eager to discuss the macro outlook, as well as areas where Wellington had differentiated ideas. I look forward to more of these valuable discussions in 2024.
As we head into the new year, I want to leave you with this thought: Ours is a talent business, and I have tremendous confidence in the people we have working on behalf of you and your beneficiaries — the 3,000+ colleagues who power our culture and our investment and client service capabilities.
On behalf of all of them, I thank you for the privilege of managing your assets and wish you the very best for the year ahead.
To download, please click the link below.
Stay up to date with the latest market insights and our point of view.
Showing
of
Insights Posts
The power of local perspective: the long and short of European equity investing
Dirk Enderlein and Boris Kergall explain why, in their view, the structural changes impacting European equity markets offer active long/short investors a rich source of potential return and diversification.
7
min
Article
2025-10-31
Ask the fund manager: investing in global small caps
What's the outlook for small caps and why might it pay to take a global perspective?
7
min
Article
2025-10-31
Quality growth — a less volatile sweet spot?
Growth stocks can be volatile, especially when companies fail to meet expectations. However, high-quality growth companies can help mitigate downside risk while still offering potential for long-term outperformance. How can investors find the sweet spot?
8
min
Article
2025-11-30
Unlocking the full value potential of stewardship
Yolanda Courtines and Alex Davis examine how corporate stewardship can be a source of value and delve into what investors can do practically to maximise its full potential.LDI Team Chair Amy Trainor explains why she believes a pension risk transfer may, in many cases, not be the best choice for fully funded plans from a cost/benefit standpoint.
5
min
Article
2025-10-31
Bonds in Brief: Making Sense of the Macro — September issue
What's driving global bond markets and what are the investment implications? Read September's issue of "Bonds in Brief" for Wellington Investment Director Marco Giordano's monthly assessment of risks and opportunities within bond markets.
4
min
Article
2025-10-31
Chart in Focus: What does the rate cut mean for equities and bonds?
Are rate cuts positive? On the heels of the much-anticipated initial Fed cut, in this article we look to historic precedent for where the markets could go in the coming months.
3
min
Article
2025-09-30
Chart in Focus: The need to differentiate market growth from macro growth
Macro growth and earnings growth have been misaligned for the last 15 years, particularly in the US and China, but in opposite directions. For equity investors, what would be the key to identify real growth?
3
min
Article
2025-09-30
When public and private markets converge
Wellington President Steve Klar discusses the evolution of the public and private markets and what it means for asset owners as they seek to tap into the growth potential of private companies and be more nimble in their investment approach.
4
min
Article
2025-09-30
Destination diversification – is your bond portfolio ready to take flight?
In a new economic era, bonds once again provide the potential for downside protection, but diversification within fixed income is increasingly important. Impact bonds can offer a differentiated and diversified way to drive both positive change and returns.
5
min
Article
2025-09-30
Time to capitalise on the evolving role of bonds?
We outline why we think the new economic era is elevating the role of bonds as a source of attractive and stable income, downside protection and portfolio diversification.
2
min
Article
2025-09-30
Opportunities in high yield: ready, steady, pounce?
Fixed income investors face a fundamentally different environment, but opportunities to target growth in high yield are emerging, provided investors can stay on the front foot.
5
min
Article
2025-09-30
URL References
Related Insights