Mercer's Olaolu Aganga on Investing in an Inflationary Environment

Investment Themes and Global Opportunities

• 💡 The current investment landscape shows strong US market outperformance, largely due to the 'Magnificent 7' companies.
• 🌍 Mercer is focusing on thematic investing, particularly the 'security of everything' theme, which spans energy transition, defense, logistics, transportation, and cybersecurity.
• 🇪🇺 The energy transition opportunity is seen as richer in Europe, where companies and the environment have been more conducive to clean energy and clean tech initiatives.

Valuation Mismatches and Emerging Markets

• 📉 Significant valuation mismatches exist between the US and other regions, with emerging markets, particularly China, being depressed.
• ⚠️ While emerging markets present opportunities, caution is advised due to political and geopolitical uncertainties.
• 🎯 Clearer themes, such as defense and energy transition, are preferred for investment.

US Dollar and Defensive Strategies

• 📊 Despite a recent decline in spot performance, the US dollar remains relatively elevated against other global currencies in longer-term valuations.
• 🔒 For defensive plays, Mercer emphasizes asset allocation and private markets, including private credit, which offer yield and coupon.

Real Estate and Inflationary Environments

• 🏗️ Real estate, as part of real assets, is considered to have bottomed out and is an attractive focus area in the current inflationary environment.
• 🔑 Permitting for infrastructure investments is moving slowly, but real estate presents a more immediate opportunity.