Post covid-19
Post covid-19
5

Covid-19: accelerating our journey to inequality

Our analysis leads us to believe that the forces driving low economic growth, increased indebtedness, low interest rates and asset inflation will only strengthen in a post COVID-19 world.

– Andrew Macken

 

Heraclitus, the ancient Greek philosopher, realised more than 2,500 years ago that the world was in constant flux. The only constant in life, as the saying goes, is change. Well, in 2020, the year dominated by the COVID-19 pandemic, the rate of change was fierce. And investors need to reflect, reset and think carefully about what the future may hold for our post-pandemic world.

In our whitepaper that follows, we analyse the broad forces we are observing in the global economy today, including their drivers and implications. We build on our internal research published in 2019 and review the latest research on many of the dynamics we are seeing today.

Our analysis leads us to believe that the forces driving low economic growth, increased indebtedness, low interest rates and asset inflation will only strengthen in a post- COVID-19 world. Furthermore, we identify inequality as an important consequence of our economic system and we see it becoming more extreme in a post-COVID-19 world. Not only does increasing inequality have important political implications, it also carries with it important (negative) side-effects to our broader economic system, including: slower economic growth, increased indebtedness, increased financial risks and greater political capture. Ironically, the price of preserving the overarching structure of this economic system is perhaps making it work more beneficially and equitably for the broader population.

We also derive the key investment implications that are guiding the construction of our Montaka portfolios today. These include a preference for: (i) equity exposure over fixed-income; (ii) businesses which are likely to deliver high-quality growth over a long period of time; (iii) businesses with strong and expanding data advantages; (iv) businesses who enjoy a relatively wealthier customer base – on either the consumer side or enterprise side; and (v) businesses which avoid the complexities and increasing risks of cross-border supply-chains – particularly with respect to Chinese borders.

 

Please download the complete whitepaper on this topic by clicking below:


Download Whitepaper

Our Montaka Global Long Only strategy strives to act as a core, high conviction, global portfolio holding. Consistent with the long portfolios in our Montaka strategies, this offering is focused on owning the world’s high quality, undervalued businesses – and cash when appropriate – to outperform its benchmark.

Our Montaka Active Extension strategy strives for maximised return over the long-term. Owning the Montaka long portfolio typically scaled up to approximately 130 percent - and the Montaka short portfolio typically scaled down to approximately 30 percent – this strategy results in a net market exposure of approximately 100 percent most of the time.

Our Montaka variable net strategy strives for significant downside protection – but with minimal upside reduction. Focused on owning the world’s great and growing businesses when they are undervalued, while managing a portfolio of short positions in businesses that are deteriorating, misperceived, and overvalued, this strategy is our flagship long-short

Our
Strategies

Our Strategies

Our Montaka Global Long Only strategy strives to act as a core, high conviction, global portfolio holding. Consistent with the long portfolios in our Montaka strategies, this offering is focused on owning the world’s high quality, undervalued businesses – and cash when appropriate – to outperform its benchmark.

Our Montaka Active Extension strategy strives for maximised return over the long-term. Owning the Montaka long portfolio typically scaled up to approximately 130 percent - and the Montaka short portfolio typically scaled down to approximately 30 percent – this strategy results in a net market exposure of approximately 100 percent most of the time.

Our Montaka variable net strategy strives for significant downside protection – but with minimal upside reduction. Focused on owning the world’s great and growing businesses when they are undervalued, while managing a portfolio of short positions in businesses that are deteriorating, misperceived, and overvalued, this strategy is our flagship long-short