Chief investment officers of some of the world’s best-known buy-side groups have urged investors to remain hopeful amid a possible economic downturn and recession.
Columbia Threadneedle’s CIO Mark Burgess joined Allianz Global Investors’ Lucy MacDonald and Standard Life Investments’ Rod Paris in warning about short-term economic pain from the UK’s decision to leave the European Union.
Speaking at the Pension and Benefits UK Conference at the QE2 Conference Centre in London, Burgess said Brexit has exasperated an already fragile environment.
However, he said there other macro-economic factors to consider.
He said: “North America is almost at full employment, and Europe is due to follow. Although recession could become a real possibility, a volatile world can always spark ingenuity.”
All three panellists acknowledged potential problems arising from low interest rates and populism, although each remained confident in the global economies’ ability to recover.
Standard Life Investments’ Rod Paris – by far the most optimistic of the three - stated the main reason for the economic reaction to Brexit, is the uncertainty.
He said: “The driving issues in this economic downturn are the result of a political decision. This is primarily uncertainty shock driving economic variables, and nothing more.”
Paris said he has a belief that Brexit can be a catalyst for change in prevailing economic orthodoxy, however.
Lucy MacDonald, managing director and CIO for global equities at Allianz Global Investors, added that Brexit was challenging already low growth in the UK economy.
She called on asset managers to be active in their convictions: “We already have significant structural growth from increased technology, social networking and transparency. Brexit cannot stop that.”
Burgess concluded: “When growth is low, we always find ways to make money”