The trade relationship between Canada and the United States has recently been making news and is among the largest in the world, with more than USD1 trillion in annual trade in goods and services. Agricultural and farm goods are always at the heart of discussions as the divide is philosophical. The US philosophy favours regulation in a free-market structure, while Canada sacrifices free market for income stability as found in the case of dairy farm quotas.

Regulatory differences affect competitivity. In the example of food additives, Canada generally requires pre-market approval by Health Canada before an additive may be used in food. The United States also regulates additives through the Food and Drug Administration (FDA), but permits the « Generally Recognized as Safe » (GRAS) framework, which allows ingredients to enter the market without the same formal review process. This has led to perceptions that Canada applies a more precautionary approach to food regulation. Small changes in regulations can affect farmer and grower profitability significantly.

The good news

North America is changing; dietary guidance in both Canada and the United States has shifted toward promoting whole foods and limiting highly processed foods. The next twenty years of food regulation may look much more like health-care regulation. Future regulators are increasingly likely to focus on metabolic health, chronic disease, nutritional quality and ingredient transparency. The food industry could experience a transformation similar to what happened with tobacco decades ago: not outright prohibition, but progressively tighter restrictions on ingredients perceived to contribute to long-term health costs. The resulting shift toward « food as medicine » may become one of the most important secular themes in agriculture, nutrition and health care.

Over the next decade, food safety regulators across the globe will increasingly focus on ultra-processed foods, food additives and dyes, sugar content, antibiotic use in livestock and nutritional labeling.

Raising the standards on raising proteins

These regulatory trends also apply to proteins, which are often affected by antibiotics and pesticide usage where regulations differ greatly by region.

As an example, Norway is generally considered the world’s most advanced and stringent salmon regulator. Amongst other measures, the country:

• Enforces strict sea-lice thresholds,
• Uses a « traffic-light » system that can limit industry growth if environmental impacts become excessive, and
• Explicitly incorporates wild salmon health into licensing decisions.

Norway has effectively said growth is permitted only if environmental performance improves.

These standards benefit companies that participate in the salmon industry via closed containment systems, sea-lice technologies, vaccines or aquaculture automation. This has allowed Norway to become the leading producer of high-quality salmon globally.

SalMar ASA (SALM NO) is the world’s second-largest Atlantic salmon producer. Headquartered in Frøya, Norway, the company operates a highly cost-efficient, vertically integrated aquaculture model spanning broodstock, smolt, ocean farming and processing. It sells to over 50 countries worldwide.

SalMar’s production footprint covers:

• Norway (Central & Northern): The foundational engine representing the vast majority of its volume.
• Iceland: Operates through its majority-owned subsidiary, Icelandic Salmon.
• Scotland: Runs a 50/50 joint venture via Scottish Sea Farms.
• SalMar Ocean: Its pioneering offshore and open-sea aquaculture division.

SalMar holds extensive unutilized capacity within its current operational licenses. Driven by exceptional biological performance (such as superior fish survival and growth rates), SalMar raised its full-year 2026 harvest guidance to 350,000 tonnes, marking a sharp 16% year-over-year volume increase from 2025. The company anticipates scaling this existing organic footprint further to reach 378,000 tonnes by 2028.

Agricultural pesticides

In agriculture, pesticide regulation can drastically affect the competitive landscape. This is evident when border regions grow similar produce such as California and Mexico.

Mexico has taken a strict stance against highly hazardous pesticides (HHPs). The country has banned over 180 pesticides that remain legally authorized in the United States, including systemic adjustments to phase out glyphosate. On the other side of the border, while California permits the use of certain chemicals banned in Mexico, it severely restricts how and when they can be applied (e.g., rigid tracking of drift, groundwater protection zones and strict worker re-entry intervals).

The California Department of Pesticide Regulation annual marketplace surveillance reports consistently shows that 97% to 98% of California-grown produce is completely compliant or features non-detectable residues. It is imported produce that dynamically accounts for a disproportionate volume of illegal pesticide residue violations.

For Mexican avocados and lemons to enter the US market legally, they must comply with US EPA pesticide residue tolerances. While Mexican avocados generally test clean because their thick, unconsumed skins shield the fruit, other Mexican citrus crops (like limes and lemons) occasionally trigger border enforcement actions due to traces of unapproved or excessive pesticides.

Global Alpha is invested in Limoneira Company (LMNR US), a diversified global agribusiness and land management corporation headquartered in Santa Paula, California.

Founded in 1893, they manage roughly 14,500 acres of agricultural land. Limoneira controls extensive global supply chains by sourcing citrus across the United States, Chile, South Africa and Mexico to ensure year-round supply for retail and foodservice buyers. Beyond pure farming, the company holds high-value, adjudicated water rights and operates a profitable real estate development arm.

Limoneira is undergoing a core business model transformation designed to unlock hidden asset value and shift capital into higher-margin segments.

Limoneira is aggressively shifting underutilized land into avocado production to capture robust, multiyear US demand growth. Avocado farming boasts superior unit economics over standard lemons. Driven by 400 acres planted in 2023 and 2024 finally reaching commercial maturation, management projected avocado production to exceed 10 million pounds in fiscal year 2027 – representing an ambitious 30% volume expansion. The company aims to add another 500 avocado acres by the end of 2027.

US trade case against Chinese choline

As food regulations increase, discrepancies between countries will multiply trade disputes and antidumping (AD) cases. In June 2026, a petition was filed alleging that Chinese producers were benefiting from Chinese government subsidies and dumping choline salts into the US market at unfairly low prices.

The U.S. Department of Commerce initiated AD and countervailing duty (CVD) investigations in July 2026, and the United States International Trade Commission (USITC) subsequently found a reasonable indication of injury to the US industry, allowing the investigations to proceed. The alleged dumping margins are substantial, ranging from 73% to over 300%. AD and CVD investigations are intended to protect US industries and workers from unfairly priced or subsidized imports as evidenced by this case regarding choline from China.

Choline is an essential nutrient used in poultry feed, swine feed, aquaculture, infant formula, human dietary supplements, functional foods and nutraceuticals.

Global Alpha participates in choline manufacturing through Balchem Corporation (BCPC US), a specialty ingredients company that operates at the intersection of nutritional science, microencapsulation technology and precise formulation.

Balchem focuses on niche markets where science-backed efficacy and stringent regulatory compliance allow for premium pricing, instead of competing as a bulk commodity supplier. The company is the global leader in choline production, dominating the market across both human and animal nutrition segments.

Rather than treating choline as a cheap bulk commodity, Balchem has spent over 50 years leveraging its proprietary manufacturing, purity testing and delivery technologies to command the leading global market share. The company’s revenue is diversified across three core business segments:

• Human nutrition & health (63% of revenue): High-margin specialty ingredients like branded choline, mineral amino acid chelates, vitamin K2 and texturizing systems used in dietary supplements, infant formula and functional foods.
• Animal nutrition & health (23% of revenue): Rumen-protected microencapsulated nutrients and choline delivery mechanisms that optimize health and milk production in dairy cattle and livestock.
• Specialty products (14% of revenue): High-purity gases and packaged chemicals used primarily in medical device sterilization, agricultural fumigation and plant micronutrient delivery.

As regulation continues to reshape agricultural costs and competitiveness, locally focused producers with resilient supply chains may be best positioned to manage inflationary pressures – a thematic we continue to follow closely at Global Alpha.

Flávio Bolsonaro’s strong showing in the first round of Brazilian presidential elections on the 4^th of October was the catalyst for a sharp rally in the Ibovespa Index this month. In previous commentaries, we argued that the market trading at a price-to-earnings ratio of around 8x reflected political uncertainty. Further, we suggested the emergence of a credible conservative candidate to contest the elections would be fuel for outperformance relative to broader EM equities.

 
In our view, São Paolo governor Tarcísio de Freitas and Mission Party leader Renan Santos would have been the most credible right-wing contenders. We were wrong to discount the chances of a Flávio Bolsonaro candidacy, largely based on his connection to Daniel Vorcaro, who has been engulfed in a vast financial and political fraud case.

Senate swings to the right

Despite Flávio’s many glaring flaws as a candidate, he posted a stronger-than-expected showing in the first round of presidential elections taking 47.0% in the runoff against Lula’s 45.1%. Polls had understated Flávio’s performance by about 5pts.

In the second-round runoff with Lula, Flávio is the clear favourite. He needs only about half of the roughly 7.7% first round vote share that went to other, mostly right-leaning candidates. The first-round leader has won every runoff since 2002.

Arguably, the most important shift was in the 81-seat Senate where the number of seats held by the left-wing Social Democratic Party (PSD) collapsed from 14 to five, the right-wing Liberal Partyrose to 28 seats from 15, while a right-of-centre bloc controls 48 seats. So even if Lula were to win the presidency, he would face fierce opposition in the Senate.

Yields plummet and rate-sensitive stocks outperform

The Ibovespa soared by over 12% in USD terms the day after the election results were announced, with investors anticipating a more market-friendly administration. We currently hold a modest overweight to Brazilian equities and, over a period of months, have been tilting the risk budget within the allocation to more rate-sensitive names that would benefit from falling yields on the prospect of a return to a more conservative fiscal policy.

These stocks outperformed through the post-first-round period, bolstered by policy announcements from the Bolsonaro team which suggest they plan to hit the ground running should they take out the second round.

Economic advisor to Flávio Bolsonaro, Luiz Felipe Trevisan, posted a series of policy commitments with some set for immediate rollout (before inauguration via Congress):

• « Super PEC » fiscal package: Plan to leverage political momentum immediately post-election to pass a R$190–200B (~1.5% of GDP) spending cut before inauguration. Focuses on internal state efficiency (administration reform, cutting 10 ministries, fraud reduction, asset sales) without touching social benefits, pensions or immediate LCI/LCA tax incentives.
• Ending re-election as bargaining chip: Proposes abolishing presidential re-election to gain Congressional support for tough fiscal reforms, positioning this as a single-term legacy play to build a bridge for Tarcísio in 2030.
• Budget and institutional governance: Aims to reform expenditure rules so Congress and the Judiciary share accountability for the spending they create. Includes setting 15-year term limits and minimum qualifications for Supreme Court (STF) nominees.
• Pro-growth and capital markets: Targets boosting infrastructure investment to R$500B/year, maintaining full Central Bank independence, revoking ~1,000 regulations (« Economic Freedom 2.0 »), and levelling tax treatment on corporate debt to attract foreign credit.

Since the 2000s mining boom the share of Brazilian equities has collapsed.

 
While EM valuations look attractive overall, Brazilian equities look especially cheap and poised to outperform on a better macro backdrop.

 
There is no shortage over high-quality companies in this deep market, and we have been building a long list of candidates which fit our stock selection process to take advantage of further positive developments.

Chart 1

The projected decline was driven by weaker nominal money expansion, with CPI momentum little changed (though likely to rise in Q4).

The further fall in real money momentum, if confirmed, supports the forecast of a decline in global manufacturing PMI new orders through end-Q1 2027 (at least) – chart 2.

Chart 2

The mooted fall in the global measure reflects declines in China, Japan and India, with Brazil remaining weak – chart 3. The final September number will depend on US / Eurozone data released next week.

Chart 3

Global six-month industrial output growth may have recovered last month, based on solid US / Chinese data – chart 4. The shortfall of real money expansion versus output growth, therefore, may have widened sharply, suggesting an increased monetary headwind for markets.

Chart 4

The basis for the calculations is a measure of the rental yield derived from the national accounts, by dividing aggregate rents (actual and imputed) by an estimate of the value of the housing stock*.

This yield bottomed at 4.0% at end-2022 and is projected to reach 5.2% by end-2026, based on H1 rental growth and an assumption of stable prices over the reminder of the year – see chart 1.

Chart 1

The yield, however, has averaged 6.0% over the last 36 years (representing two complete housing cycles). Based on current rents, prices would need to fall by a further 14% to achieve this level.

An assessment of fair value should also take into account yields / expected returns on competing investments. Index-linked gilts are a “risk-free” alternative, their coupons providing similar inflation protection to rents.

The premium of the rental yield over the yield on over-five-year index-linked gilts averaged 4.8 pp over the last 36 years, currently standing at 3.1% – chart 1. Closing the gap would require a 37% fall in house prices, based on current rents and assuming an unchanged real yield.

The comparison with index-linked offers a different interpretation of recent history. Rather than signalling house price overvaluation, the low level of the rental yield at end-2022 was consistent with still-negative index-linked yields – the rental yield premium was close to its long-term average.

The rise in the rental yield since then has lagged the increase in index-linked yields, resulting in the rental yield premium falling to its lowest level since 2007.

The suggestion, therefore, is that housing has become more expensive despite a rising absolute level of the rental yield, with the degree of overvaluation now comparable with the beginning of the crash phase of the last 18-year cycle.

*See footnote in previous post for more details.

Since taking office in July, UK Prime Minister Andy Burnham has outlined a broad economic agenda focused on infrastructure investment, reindustrialization and regional development. While the government’s comprehensive 10-year plan is expected later this year, the 28 October Autumn Budget will provide the first meaningful indication of funding commitments and implementation timelines.

Among social care and pension reforms, much has been said about infrastructure and growth, with a 10-year plan for greater investment, reindustrialization and regional growth.

The Burnham government has outlined an ambitious multi-year infrastructure programme, anchored by the 10-Year Infrastructure Strategy published in June 2025 and the Spending Review covering 2026–2030. The 10-Year Infrastructure Strategy commits £725 billion in capital funding for economic and social infrastructure over the next decade. The UK Infrastructure Pipeline details more than 700 planned projects.

To gain exposure to UK infrastructure spend, Global Alpha recently initiated a position in Balfour Beatty PLC (BBY LN), an international infrastructure group operating across construction, engineering and asset management.

Balfour Beatty operates through three segments:

1. construction services – physical construction of assets including buildings, highways, rail and power generation,
2. support services – maintenance, refurbishment and upgrade of existing infrastructure, including power transmission and distribution, and
3. infrastructure investments – acquisition, operation and disposal of infrastructure assets.

Revenue is generated primarily through long-term public-sector framework contracts and project-based work, with revenue from the UK and North America evenly split, and a joint venture in Hong Kong contributing the remaining 9% of sales.

The company’s competitive advantages include its scale, technical expertise in complex infrastructure markets and a growing order book that provides multi-year revenue visibility. Importantly, its core end markets align closely with areas expected to receive the largest share of future infrastructure investment.

Energy and power transmission

In UK energy, Balfour Beatty has a 25% market share in the UK power transmission market. Ofgem, the UK’s regulatory body supervising the operation of the gas and electricity industry, has already announced an investment to upgrade power and gas grids that will increase to an estimated £90 billion by 2031. The approved investment will fund 80 transmission projects, such as new power lines, substations and other technologies, over that period. Balfour Beatty is also heavily involved in projects such as the new nuclear power stations at Hinkley Point C and Sizewell C, the Net Zero Teesside power station with carbon capture.

National security and defence

Regarding UK defence, Balfour Beatty has a strong track record and existing footprint in complex, high security and nuclear environments. The UK has committed to increasing defence spending to 3.5% of GDP by 2035 as part of the Defense Investment Plan. Defence is seen as a growth engine in the UK, turning national security into a direct driver of economic productivity. UK capability, security clearance and ringfenced IT systems will be prioritized, a positive for Balfour Beatty. The new CFO has extensive experience in the defence industry, having come from BAE Systems, the largest defence contractor in Europe.

Transportation

Investment in the UK transport network is an important component of the government’s growth plans and is essential to address aging infrastructure, net zero targets and domestic and international connectivity. Given Balfour Beatty’s capabilities in the construction and maintenance of road and rail, and its experience in delivering major airport projects, the company is well positioned to capitalize on transport opportunities when they arise, with growth expected in the medium term.

US data centre projects

Across the pond in US buildings, Balfour Beatty is well positioned in strong growth states and sectors. Balfour Beatty is targeting aviation and data centres, growing sectors which align with the company’s expertise. Aviation estimated to be a $140 billion construction market from 2026 to 2029. The company has a good track record, currently delivering a range of projects at seven airports. Data centres are estimated to be a $250 billion market over that period. Balfour Beatty has been active in data centre construction for around 20 years, delivering around 80 data centres in the Northwest region, and is leveraging existing relationships to expand its US footprint.

Risk, catalyst and the path ahead

Execution risk is always a concern with contractors, but the UK public infrastructure procurement environment has undergone significant transformation over the past decade, driven by a government focus on better delivery and stability. Structural improvements have led to a more balanced risk profile between customer and contractor: the adoption of collaborative cost models, prevalence of frameworks as a standard procurement route, early contractor involvement, and increased weighting of non-financial criteria in bidding.

The UK’s Autumn Budget represents the key near-term catalyst for the investment thesis. It should provide greater clarity on the government’s infrastructure spending commitments, funding mechanisms and implementation timetable. While fiscal constraints remain a risk, Balfour Beatty’s exposure to energy transmission, defence, transport and selected US growth markets positions the company to benefit if planned investment levels materialize.

Depuis des décennies, les investisseurs institutionnels bâtissent des portefeuilles de plus en plus sophistiqués dans le but d’obtenir de meilleurs résultats. Chaque nouvelle catégorie d’actifs, chaque nouvelle stratégie et chaque nouveau gestionnaire a été ajouté dans l’intention d’améliorer les rendements, d’accroître la diversification ou de renforcer la gestion des risques.

Cependant, cette recherche de sophistication est-elle allée trop loin? À une époque où des portefeuilles simples de marchés publics peuvent rivaliser avec des structures plus complexes, voire les surpasser, les investisseurs devraient se demander si chaque niveau de complexité continue de justifier sa place et s’il demeure porteur d’un objectif précis. Les investisseurs doivent trouver le juste équilibre entre la sophistication des placements et l’efficacité de la gouvernance, tout en évitant le risque de bâtir des portefeuilles inutilement complexes et difficiles à gouverner efficacement.

La course à la complexité

À presque toute conférence sur les placements, les projecteurs sont souvent braqués sur un grand investisseur sophistiqué qui dévoile sa dernière innovation en matière de portefeuille. Leur réussite peut donner l’impression que les stratégies complexes sont à la fois attrayantes et nécessaires. Pourtant, ce qui fonctionne pour un fonds souverain ou un grand régime de retraite public ne se transpose pas nécessairement facilement à un régime de retraite de 1 milliard de dollars doté d’une petite équipe de placement. L’enjeu n’est pas l’accès à des placements sophistiqués, mais la capacité de les gouverner efficacement.

Il faut préciser que la complexité n’est pas intrinsèquement mauvaise. Bon nombre des innovations les plus importantes en matière de placement institutionnel ont procuré des avantages concrets. L’investissement axé sur le passif, par exemple, a amené les investisseurs des régimes de retraite à dépasser la seule perspective de l’actif pour tenir compte de l’interaction entre les actifs et les passifs. Cela a aidé les promoteurs à mieux gérer le risque lié au ratio de capitalisation et à accroître la stabilité des exigences de cotisation et des charges de retraite.

De même, l’immobilier commercial, les infrastructures, le capital-investissement et le crédit privé ont élargi la gamme d’outils à la disposition des investisseurs institutionnels en offrant des combinaisons attrayantes de potentiel de rendement, de diversification, de protection contre l’inflation et de génération de revenu. Les progrès de l’analyse factorielle et de l’investissement fondé sur les facteurs ont également permis aux investisseurs de mieux comprendre les sources du risque et du rendement.

La complexité a sa place dans un portefeuille lorsqu’elle règle un problème ou crée un avantage mesurable. Le défi survient lorsque la complexité devient une fin en soi. Les investisseurs doivent alors se demander si chaque niveau supplémentaire améliore réellement les résultats ou s’il ne fait qu’ajouter des coûts, un fardeau de gouvernance et des exigences opérationnelles. Autrement dit, la sophistication a-t-elle renforcé la résilience du portefeuille ou celui-ci est-il devenu victime de la course à la complexité?

La loi des rendements décroissants de la diversification

De nombreux grands portefeuilles institutionnels comprennent maintenant des dizaines de stratégies et de gestionnaires sous-jacents et, pour certains des plus importants investisseurs, un nombre encore plus élevé. Bien que chaque ajout puisse sembler justifié pris isolément, l’effet cumulatif peut être un portefeuille de plus en plus difficile à comprendre, à superviser et à gouverner. Les expositions commencent à se chevaucher, les risques deviennent moins transparents et la prise de décision ralentit et devient plus lourde. Plutôt que d’améliorer les résultats, les ressources sont de plus en plus consacrées à la gestion de la complexité elle-même.

Il arrive un point où chaque nouvelle stratégie ajoute davantage de complexité qu’elle n’apporte de diversification significative. Ce qui semble initialement renforcer le portefeuille peut plutôt accroître les exigences de gouvernance, les coûts opérationnels et les besoins de surveillance. Dans certains cas, les investisseurs peuvent simplement empiler plusieurs stratégies offrant des expositions sous-jacentes semblables, créant une illusion de diversification tout en rendant le portefeuille de plus en plus difficile à comprendre et à gérer.

Chaque niveau de complexité entraîne un coût. Certains coûts sont visibles, comme les frais de gestion, les charges d’exploitation et les exigences de surveillance. D’autres sont moins évidents, mais potentiellement plus importants : prise de décision plus lente, transparence réduite, biais comportementaux et responsabilisation moindre. Même si ces coûts de gouvernance sont rarement mesurés, ils peuvent déterminer si la complexité améliore ou réduit les résultats à long terme.

La construction de portefeuille est autant un exercice de gouvernance qu’un exercice de placement. Les portefeuilles les plus efficaces ne sont pas nécessairement les plus sophistiqués, mais ceux qui harmonisent les objectifs de placement avec la capacité d’une organisation à gouverner le risque, à surveiller la performance et à prendre des décisions en temps opportun.

Établir un budget de gouvernance

Tout comme les investisseurs établissent des budgets de risque et répartissent le capital de façon réfléchie, ils devraient également envisager un budget de gouvernance. Chaque décision de placement mobilise du temps, de l’attention et de l’expertise en matière de gouvernance. Lorsque la complexité dépasse la capacité disponible, les coûts cachés peuvent se manifester sous forme de décisions retardées, de difficultés de surveillance et de réduction de l’agilité organisationnelle. Par conséquent, le plus grand coût de la complexité d’un portefeuille est souvent celui qui n’apparaît jamais sur un relevé de frais. Il est donc essentiel d’évaluer si la capacité de gouvernance peut soutenir la stratégie du portefeuille.

Pour les comités, un exercice utile consiste à déterminer si leur portefeuille passe les quatre tests suivants :

1. Le comité peut-il expliquer les sources de rendement et de risque du portefeuille?
2. La stratégie peut-elle être mise en œuvre efficacement?
3. Peut-elle être surveillée et gouvernée efficacement?
4. Chaque composante a-t-elle une raison d’être et un rôle distincts?

Lorsque la réponse à l’une de ces questions est incertaine, la complexité peut ajouter davantage de fardeau que d’avantages. Dans de tels cas, l’objectif ne devrait pas être la simplification pour elle-même, mais plutôt la recherche d’une simplicité intelligente, dans laquelle chaque stratégie doit démontrer sa contribution clairement et mériter sa place au sein du portefeuille.

La simplicité intelligente

La simplicité intelligente ne constitue pas un rejet des placements sophistiqués. Elle reconnaît plutôt que la complexité devrait être un choix délibéré et non un résultat par défaut. Les portefeuilles sont mieux servis lorsque chaque stratégie, chaque gestionnaire et chaque répartition peut clairement démontrer pourquoi sa présence est justifiée et comment elle améliore l’ensemble du portefeuille. La simplicité intelligente consiste à atteindre les résultats souhaités avec le plus petit nombre nécessaire de composantes de portefeuille.

Des structures de portefeuille plus simples encouragent les investisseurs à se concentrer sur les décisions qui comptent le plus. Plutôt que de consacrer du temps de gouvernance à choisir entre des dizaines de gestionnaires, les comités peuvent accorder davantage d’attention à des tâches telles que la répartition stratégique de l’actif, la budgétisation du risque et l’analyse de scénarios, qui peuvent souvent offrir un meilleur rendement sur l’effort de gouvernance que des décisions additionnelles de sélection de gestionnaires.

Chaque composante d’un portefeuille devrait contribuer de façon significative aux résultats globaux du portefeuille et justifier le fardeau de gouvernance qu’elle crée. Ce principe est au cœur de l’approche axée sur le portefeuille total (TPA), qui gagne en popularité auprès des plus grands investisseurs mondiaux et dans laquelle les placements sont évalués en fonction de leur contribution aux objectifs globaux du portefeuille. Bien que l’adoption complète de la TPA exige des changements organisationnels importants, sa discipline sous-jacente s’applique à tous.

Les investisseurs peuvent commencer par réévaluer périodiquement chaque stratégie, chaque gestionnaire et chaque répartition avec un regard neuf. Si une position ne serait pas retenue aujourd’hui pour faire partie d’un portefeuille nouvellement construit, son maintien mérite d’être examiné. Une complexité qui ne peut être justifiée par sa valeur actuelle peut simplement être l’héritage de décisions antérieures.

Considérations pour une simplicité intelligente

En réduisant la complexité inutile, en rationalisant la structure des gestionnaires et en harmonisant la conception du portefeuille avec les objectifs globaux du fonds, les investisseurs peuvent créer des portefeuilles plus faciles à comprendre, plus faciles à superviser et plus efficaces.

Cependant, adopter une simplicité intelligente ne réduit ni la responsabilité fiduciaire ni l’importance de la formation continue. Une surveillance efficace exige toujours une formation continue, une prise de décision disciplinée et une compréhension approfondie des risques et des occasions qui façonnent les résultats à long terme.

1. Regrouper les expositions similaires
   Au fil du temps, les portefeuilles peuvent accumuler des niveaux de placement qui semblent différents en surface, mais qui reposent sur les mêmes facteurs économiques sous-jacents. Cela peut se produire sur les marchés publics et privés ou lorsque plusieurs gestionnaires actifs appliquent des styles semblables. Un examen plus attentif des véritables sources de rendement du portefeuille peut révéler que la diversification est plus limitée que ne le laisse croire le nombre de mandats, créant ainsi des possibilités de simplification sans compromettre les résultats.

2. Réduire le nombre de gestionnaires
   Un plus grand nombre de gestionnaires ne crée pas toujours un meilleur portefeuille. Dans de nombreux cas, une liste plus restreinte peut donner une vision plus claire des risques du portefeuille, renforcer la responsabilisation des gestionnaires, simplifier la surveillance et améliorer l’efficacité des coûts. Le regroupement des mandats peut permettre aux investisseurs de se concentrer sur leurs relations les plus importantes tout en maintenant une exposition étendue aux marchés. Par exemple, des mandats distincts d’actions américaines, internationales et de marchés émergents peuvent être gérés efficacement au moyen d’un plus petit nombre de mandats d’actions mondiales.

3. Se concentrer sur les résultats, et non sur les catégories d’actifs
   Les portefeuilles institutionnels sont souvent organisés selon les catégories d’actifs. Mais lorsqu’on les examine sous l’angle des résultats recherchés, comme la croissance, le revenu, la protection contre l’inflation et la résilience, plusieurs catégories d’actifs différentes peuvent remplir la même fonction. Les infrastructures, l’immobilier, les obligations indexées sur l’inflation et le crédit privé peuvent tous contribuer à la génération de revenu et à la protection contre l’inflation.Lorsqu’ils adoptent cette perspective axée sur les résultats, les investisseurs découvrent souvent que plusieurs stratégies règlent le même problème, ce qui crée des possibilités de simplification sans compromettre les résultats.

4. Adopter un budget de complexité
   Tout comme les investisseurs fonctionnent dans les limites d’un budget de risque, ils devraient également envisager d’établir un budget de complexité. Avant d’ajouter une nouvelle stratégie, il faut poser quatre questions essentielles :
   • Quelle valeur distincte cette stratégie apporte-t-elle au portefeuille?
   • Quelle répartition existante pourrait-elle remplacer?
   • Comment le succès sera-t-il défini et mesuré?
   • Avons-nous la capacité de gouvernance nécessaire pour la superviser efficacement?

   Un budget de complexité fait passer la conversation du simple ajout des dernières idées à des choix délibérés et fortement affirmés, contribuant ainsi à faire évoluer les portefeuilles de façon réfléchie plutôt qu’à les laisser accumuler des niveaux de complexité inutiles.

5. Privilégier la compréhension
   Une bonne règle pratique en matière de gouvernance veut que les membres du comité puissent expliquer avec confiance d’où devraient provenir les rendements, quels risques sont pris et comment le portefeuille est susceptible de se comporter dans différentes conditions de marché. Lorsque cela devient difficile, cela peut indiquer que la complexité a pris le dessus sur la clarté. L’objectif n’est pas la simplicité pour elle-même, mais un portefeuille dans lequel chaque composante remplit une fonction distincte et compréhensible. Le résultat est souvent une surveillance plus efficace, une conviction mieux définie et un portefeuille plus facile à défendre lorsque les marchés deviennent difficiles.

Repenser la conception grâce à la simplicité intelligente

La gouvernance est souvent le déterminant caché de la réussite en matière de placement. Alors que les investisseurs institutionnels accordent beaucoup d’attention à la performance, au risque et aux coûts, ils sont beaucoup moins nombreux à examiner si leur modèle de gouvernance renforce ou limite la prise de décision. La conception d’un portefeuille devrait tenir compte non seulement des occasions de placement, mais aussi de la capacité de gouvernance. Un portefeuille bien conçu est un portefeuille qu’une organisation peut comprendre, superviser et maintenir avec confiance dans différents contextes de marché.

La simplicité intelligente exige d’évaluer les portefeuilles sous deux angles tout aussi importants : l’efficacité des placements et l’efficacité de la gouvernance. L’objectif n’est pas d’éliminer la complexité, mais de s’assurer qu’elle mérite sa place. Les stratégies qui améliorent véritablement les résultats et qui peuvent être gouvernées efficacement méritent d’être incluses. Celles qui mobilisent une part disproportionnée de l’attention, des ressources ou des efforts de surveillance pour un avantage limité devraient être réévaluées. Un portefeuille optimal n’est pas nécessairement le plus sophistiqué, mais celui qui atteint ses objectifs avec le plus de clarté, de conviction et d’efficacité en matière de gouvernance.

Chart 1

The global money numbers conceal a divergence between US strength and alarming real-terms contractions in Europe, Japan and Australia, with Chinese growth running at a modest level by its historical standards – chart 2. One implication is that the expected global slowdown will be led by the weak-money grouping, with the US and China showing resilience. Another is that the ECB and BoJ have already overtightened policy, while the US Fed may still be some way “behind the curve”.

Chart 2

The global real money slowdown was initially driven by an inflation boost from higher energy prices. Nominal money growth has fallen more recently, probably reflecting the initial impact of policy tightening – chart 3.

Chart 3

Six-month consumer price momentum will likely rebound in Q4, based on current commodity prices. US monetary exceptionalism, meanwhile, may be ending, with nominal money growth falling back in August. Global real money expansion, therefore, could slow further into year-end, in turn signalling darker economic prospects for mid-2027.

Chinese policy is an upside risk. A slowdown in exports as global growth cools could be the trigger for more substantive measures to boost domestic demand. Still, the full impact of any monetary pick-up probably wouldn’t land before mid-2027.

Eurozone narrow money weakness has been led by France and Italy – chart 4. Eurozone banks, meanwhile, have stopped buying French Treasuries. The French government’s 2027 deficit-reduction plan looks both insufficiently ambitious and unachievable ahead of the April / May presidential election. An economic / funding crisis may be brewing unless the ECB signals an earlier-than-expected end to policy restraint.

Chart 4

Global six-month real narrow money growth crossed below industrial output expansion in April, remaining lower in August. The change in “excess” money conditions has been reflected in upward pressure on bond yields and a stalling-out of equities, with the equal-weighted version of the MSCI World index recently falling below its end-February level.

The real money / output growth gap could remain at around its current level into year-end, with both components losing momentum. Historically, equity market performance has been correlated with the sign of the gap, with bond markets more sensitive to its rate of change. The suggested scenario, therefore, could be associated with a stabilisation of bond yields and disappointing equity returns.

De quelle façon la structure d’actionnariat d’un gestionnaire de placements influence-t-elle la façon dont il développe ses activités et sert ses clients à long terme?

Dans un récent article publié par Benefits and Pensions Monitor, Michael Walsh, président et directeur général du Groupe financier Connor, Clark & Lunn, discute du modèle privé de la société, détenu par ses employés et ses associés, ainsi que du rôle de l’actionnariat pour attirer et fidéliser les talents en placement, harmoniser les incitatifs et favoriser une approche axée sur le développement des activités à long terme.

« Nous sommes dans le domaine du capital intellectuel, et la façon de réussir dans ce domaine consiste à attirer des personnes de grand talent au sein de la société, à les fidéliser à long terme et à développer des entreprises », explique Michael. « Une personne qui se joint à nous a la possibilité de devenir propriétaire, ce qui est intrinsèquement motivant. »

L’article examine également la structure multiaffiliée du Groupe financier CC&L, notamment la façon dont l’actionnariat soutient l’indépendance de ses équipes de placement et crée des incitatifs favorisant la relève et la continuité à long terme.

 
Lire l’article complet (en anglais seulement)

The view here is that the rise is best understood as a symptom of a restrictive shift in global “excess” money conditions.

Conditions are defined to be accommodative or restrictive depending on whether the global stock of money is above or below the level required to support current economic activity. Any imbalance – and its rate of change – will have implications for asset prices.

Excess money can’t be observed directly. A flow-based proxy measure found to be informative historically is the difference between six-month rates of change of global real narrow money and industrial output.

In data since 1970, global equities performed strongly on average when this measure was positive (allowing for reporting lags), lagging cash returns when it was negative.

Government bond markets appear to be more sensitive to changes in excess money than its level. Chart 1 shows a coincident relationship between the six-month change in US 10-year Treasury yields and the equivalent change in the proxy measure, plotted inverted – chart 1.

Chart 1

Global real money growth moved from above to below industrial output expansion between February and August, i.e. the proxy measure switched from positive to negative – chart 2. An associated shift in its six-month rate of change aligns with the pick-up in yields – chart 1.

Chart 2

How might excess money conditions develop from here? Monetary trends are difficult to forecast but policy tightening and a near-term inflation boost from higher energy costs suggest a further decline in real money growth.

Upbeat September PMI results support optimism about near-term industrial output prospects but slower real money growth may be reflected in a loss of momentum towards year-end, allowing for a normal lag.

A reasonable expectation, therefore, is that the real money / output growth gap will remain negative but stop widening soon. The six-month change in the proxy measure, in other words, could return to zero, in turn implying a stabilisation of bond yields.

A still-negative gap would, however, suggest downside risk for equities.

Chart 1

Real money momentum peaked in February and has led global manufacturing PMI new orders by seven months at the last three turning points, suggesting a PMI peak around now – chart 2.

Chart 2

As previously discussed, global real money momentum has been supported by a pick-up in the US, in contrast to weakness in Europe and Japan. US six-month momentum pulled back in August, although this reflected an unfavourable base effect rather than a soft current-month change. The Eurozone and Japan, meanwhile, moved deeper into contraction – chart 3. (UK data will be released next week.)

Chart 3

Monetary trends support last week’s decisions to hike by the Fed and hold by the BoE but argue that ECB / BoJ tightening has been misguided and will result in unnecessary economic weakness.

Will global real money momentum fall further? Higher rates and the Fed’s suspension of securities purchases suggest slower nominal growth, while energy price strength will drive a near-term rebound in CPI momentum – chart 4.

Chart 4

August industrial output data are still patchy but global six-month momentum is likely to have remained above that of real narrow money, suggesting deficient liquidity for markets – chart 5. Bond markets have so far borne the brunt of this squeeze but a PMI reversal could transfer pressure onto equities.

Chart 5