4 Things You May Have Missed: Day Two of the 2023 Morningstar Investment Conference

From live podcast recordings to exciting exhibitions, there’s so much that’s been happening at #MICUS . Here’s a recap of four key events of day 2!??

1. A Conversation with Former Treasury Secretary Larry Summers?

Today started off with an informative session with Former Treasury Secretary Larry Summers on inflation, the outlook for a recession, credit risks, the Federal Reserve, and the overall state of financial markets. Daniel Needham, CFA interviewed Summers on big policy decisions and pertinent historical lessons that can help illuminate the current status of financial markets.?

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“Soft landings are the triumph of hope over experience,” Summers said on the topic of inflation, “When inflation comes down, it brings alongside a significant economic downturn. I’d be surprised if we get through this, with inflation in shouting of distance of 2%, without a recession.” ?

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In discussing the Federal Reserve, Summers noted that he often tells financial industry audiences, “You are more into the Fed than they are into you.” Ahead of next week’s meeting, he noted that he believes the right thing for the Federal Reserve to do is to raise rates by 25 basis points in May. ?

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Interested in this topic? Read Morningstar’s latest economic forecast for interest rates, inflation, and GDP growth.?

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2. Trends that Contribute to Market Turmoil?

Daniel J. Ivascyn, group chief investment officer at PIMCO, shared how the current economic landscape impacts the firm’s investment philosophy. He focused on the evolving risk landscape and emerging trends affecting the current market turmoil.?

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Ivascyn highlighted many factors influencing global markets to underline the risk of shocks that are nearly impossible to model. He sees an imminent need for investors to be more globally aware to make educated, precise investment decisions. ?

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3. Advice from Portfolio Manager Steve Romick?

With 30 years at the helm of the FPA Crescent Fund, FPA Funds Portfolio Manager Steve Romick has evolved his approach to value investing over the years. Some of his key pieces of advice include: ?

• Stay principled in your approach. Romick prioritizes protecting capital and buying names at a discount—two factors he considers too core to compromise. ?
• Continuous learning. One lesson Romick shared was realizing that you can get good businesses for a great discount, and the best businesses rarely trade below the book.?
• Avoiding mistakes. While he’s experienced great success leaning into fear amidst crisis, for example, as a buyer during the depths of the COVID-19 pandemic sell-off, his team exercises caution - allowing itself to stub a toe but not to lose a toe entirely. ?

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4. Demystifying Thematic Investing?

A panel of Morningstar experts explained the risks and roles that thematic funds can play within investor portfolios. All three emphasized that while many thematic funds performed exceptionally well throughout the pandemic, investors must look beyond strong recent performance and a compelling narrative when making investment decisions. Read more about thematic investing here !?

?Missed #MICUS Day 1? Check out this one-minute recap and catch up day 1’s daily digest to make sure you’re keeping up with all the insights!?