How to Invest in a Low-Yield World
Lim Chow Kiat, CFA, group chief investment officer of the Government of Singapore Investment Corporation, the sovereign wealth fund, was given an unenviable assignment at the 66th CFA Institute Annual Conference: Tell us how to invest in a low-yield world — and in so doing, solve one of the greatest mysteries of our current environment.
Lim began by telling the story of how we got here. No, it was not because of the global financial crisis. We arrived in our low-yield world after traveling down a massive, 30-year credit expansion cycle. This was the result of a long disinflation trend stemming from Volcker Effects (named for the former U.S. Federal Reserve chairman); supply shocks caused by a billion Chinese workers competing globally on the basis of low wages; and globalization. (This is what death by a thousand paper cuts looks like, by the way.)
OK, great, you might say, but how should I invest? Lim’s answer is really quite simple: There are no easy answers! Still, that does not mean that nothing can be done.