February 21, 2024 

Now is the time for active investing – Wellington's Asia-Pacific head

Investors should prepare for more dispersion in markets, divergence and shortening of market cycles, and "everything being more desynchronized than it was in the previous regime," said Janet Perumal, head of Asia-Pacific and head of investments APAC at Wellington Management.


In an exclusive interview — in which it was revealed that Perumal will move to Singapore from Hong Kong to take on the additional role of head of office for Singapore, effective July 1 — she said the past years of long periods of negative correlations, quantitative easing, and market-cycle alignment across the globe have come to an end.

And it will be more important than ever to be able to sift through winners and losers through bottom-up fundamental research across asset classes, she added.


"I think the time for active management is coming back," she said from Wellington's Hong Kong office.


She succeeds Jawan Parker, who will be returning to the U.S. for another role with the firm, a spokesperson said.


Allocators have been favoring cash over equities since the Federal Reserve started its rate-hike cycle in early 2022. "It has definitely not been the type of environment for an equity long-short strategy to outperform," she observed.

Janet Perumal, Wellington Management

Within fixed income, allocators are looking for more flexibility and dynamically managed duration, she added. However, they are still looking for higher-quality assets because of the uncertainty in the market over the direction inflation will go in, and how central banks will respond to its movements.


The S&P 500 fell 1.4% on Feb. 13 after the U.S. consumer price index rose 3.1% year-on-year to January, vs. 3.4% for the 12 months to end-December — disappointing investors that were expecting a steeper drop.


"Resiliency, from a portfolio diversification perspective, is going to be important. Asset classes like global macro hedge funds can help with that. On the equity side, thinking about more defensive equities with downside protection, given more volatility uncertainty in the cycle, could be important," she said.


Looking back to look forward

Perumal also believes that investors need to look as far back as 50 years to have a sense of what is ahead. "If you anchor to the last 10 years, it's not going to give you a really good window into where the regime is going in the future," she said. "You'd have to go back 40, 50 years to get a better sense of what structurally might be ahead of us."


The world will likely face continuous disruptions that we haven't seen before. For instance, artificial intelligence is relatively new and there are questions about how it will play out, how it will be regulated, and how it will be adopted in an increasingly multipolar world, she said.


"I think you need to be really cognizant that you can't hold on to the assumptions that might have been serving you well over the last number of years … And being able to call upon that experience is going to be an advantage," she said.


Wellington has teams of analysts that research technology opportunities globally, and "a large (part) of what they're investing in is in AI-related plays," Perumal said. This includes hardware that powers AI tools, for instance in the cloud or applications, she added.


The firm also has an internal business group exploring how AI can help Wellington more effectively respond to requests for proposals and drive productivity enhancements on investment platforms.


"Our investment science group views investing as an art and a science, so they have data scientists and quant scientists, thinking through how we can get better on the science and risk management for portfolio construction. They've been doing a lot of work on AI by exploring large language models (and) natural language processing, as important alternative data sets," she said.


AI has impacted the asset management industry in various ways in recent years, through the provision of new investment opportunities and the potential for integrating AI technology into business processes.


For instance, AI-related stocks have rallied in the past year, pushing Nvidia Corp.'s market value on Feb. 14 above Amazon Inc.'s for the first time, and investors have flocked to generative AI companies, particularly in the venture capital space. The Monetary Authority of Singapore has also said it uses data analysis technologies such as AI and machine learning to sense risk signals in data.


Wellington had $1.2 trillion in assets under management as of Dec. 31. Its Asia-Pacific AUM is unavailable, but CEO Jean Hynes said in September that 30% of its employees, clients and assets are in APAC and in Europe, the Middle East and Africa.

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