August edition: Market outlook, action points for not-for-profit investors, Asia-Pac investment insights and meet Renee McGowan.

Welcome to our August edition of Navigating Investments, a monthly newsletter bringing you our best investment and research ideas addressing key themes facing professional investors like you.

We hope the content helps you invest with confidence.?

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After a turbulent first half, markets debate a soft vs. hard landing

The global economy is facing significant cyclical pressures . After an unprecedented recession driven by the COVID-19 crisis, economies have recovered aggressively. However, recovery has outpaced capacity and the combination of supply chain disruptions, high commodity prices and tight labor #markets has ignited inflation across both developed and emerging markets.?

The Fed and other central banks have begun tightening monetary policies to curb these inflationary pressures, and a slowdown now feels inevitable. It is necessary to ensure #inflation – wage inflation, in particular – does not become entrenched. But the response has been belated, and we believe inflation is likely to be brought back towards the 2% target over the medium term, consistent with sustainable growth in the US. Further, our base case is that this can be achieved without a deep recession, as we believe the global #economy is fundamentally resilient. We believe that the excess savings accumulated over the COVID-19 crisis and healthy corporate balance sheets are likely to provide a valuable cushion in a period of tightening financial conditions and economic slowdown.

Although our base case is for inflation to be tamed without going through a period of deep recession, the risk of recession is elevated. The more upward inflation surprises we get, the more entrenched inflation it becomes and the more likely the Fed (and other central banks) will need to slow economies down even more harshly help to achieve price stability in the medium term.

What’s on the minds of not-for-profit (NFP) investors in what could be one of the most challenging market environments for many years??

Our recent survey canvassed the opinions and intentions of NFP investors from around the world on a range of subjects, and found that:

59% cite low expected future returns as the biggest concern over the next three years.

• 65% see diversifying away from traditional asset classes as their greatest opportunity over the next three years.
• 70% are getting external #investment support for their portfolios.
• 72% state an intention to increase or significantly increase their exposure to ESG-focused investments over the next 12 months.?

We reported on the results of our survey as well as set a range of possible action points for NFPs to help them overcome challenges and achieve the objectives of their not-for-profit organization.

Not-for-profit investors are invited to join Hill Gaston, UK Head of Sustainable Investment at Mercer and Martin Rich , Chair of the Endowment Investment Committee at Access - The Foundation for Social Investment September 7, at 3:00 PM BST / 10:00 AM EST . They will explore, along with other panelists, the breadth of strategies needed for portfolios to align with a mission of #netzero and the broader impact goal of foundations. ?

How do investors manage inflation and recession risks?

The range of potential outcomes has broadened, and the diversification toolkit has widened. When there’s uncertainty as to where the global economy is heading, institutional investors should look to diversification as a way to manage current inflation and recession risks.

Join our LinkedIn Live event September 8 at 8:00 AM EST as we discuss the latest investments trends and opportunities (specifically for the Asia Pacific region), as well as insights on allocating to private markets and designing your ESG policy.

Bring your questions to our host, Helene Li , CEO & Co-Founder, GoImpact Capital Partners , who’s conducting the conversation LIVE with Simon Coxeter , Mercer's Head of Manager Research, Asia Pacific and Janet Li , our Asia Wealth Business Leader.

This month, we’re delighted to feature Renee McGowan , President, Asia Middle East & Africa (AMEA). Renee leads Mercer’s business in 18 markets across this fast-growing, dynamic region, and she’s passionate about making a difference in people’s lives through advising organizations on their health, wealth and career strategies for employees. ?

A firm advocate for the financial inclusion and security of individuals, Renee?previously led Mercer’s partnership with the World Economic Forum on the Retirement and Investment Systems Reform Project, and she is regularly featured in international media, including WEF, BRINK, The New York Times, The Washington Post, The South China Morning Post and CNBC. In 2022, she was named one of Arabian Business’ 50 Inspiring Female Business Leaders

Renee spends her free time mentoring entrepreneurs in developing nations as part of the Cherie Blaire Foundation’s Mentoring Women in Business Program, and she is an active supporter of ensuring education for girls globally.

Connect with Renee and ring her “follow bell” to keep up with her content, perspectives and conversations on navigating the changing nature of #careers , work and #retirement .?

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Thanks for reading the Navigating Investments newsletter and let us know in the comments below what topics you’d like to see in our next edition.

Important Notices and Disclosure ??