What are some of the biggest challenges facing international investors today?
Jo Taylor: Higher inflation rates continue to persist. Should this continue, it may lead to further interest rate hikes in the near term, which will make it harder for firms to generate returns. Combined with the prevailing geopolitical backdrop, the current environment is likely to remain challenging in the short and medium term. However, as a long-term focused global investor, we are well equipped to navigate these complexities.
What have been some of the ways you’ve been tackling economic headwinds?
JT: Many say we behave more like a hedge fund than a traditional pension plan because we move capital between our different asset classes very deliberately and quite significantly. For instance, at the outset of 2020, nearly 50% of our balance sheet was in fixed income, but by the end of the year, it stood at zero. We reallocated the best part of $120 billion into other asset classes.
We have also accelerated our credit activity. Some of these opportunities have been in private equity-style deals. We're also in strategic discussions with banks interested in outsourcing their credit to a third party to increase their capacity for new lending.