Matt Kadnar, portfolio manager at GMO, joins Ed Harrison to share his approach to asset allocation and risk management at this unique market juncture.
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Featuring Matt Kadnar and Ed Harrison
Feb 26, 2021 • 52 minutes
In the wake of interviews with Jeremy Grantham and his recent heir apparent Ben Inker, managing editor Ed Harrison welcomes a third member of GMO, portfolio manager Matt Kadnar, to Real Vision. Kadnar shares with Harrison his approach to asset allocation and risk management at this unique market juncture. Kadnar thinks a cyclical bout of inflation could be due, but is skeptical that a 1970s-era level of secular inflation will linger for long since these serious periods of inflation are caused by a wage price spiral and unemployment remains high. Kadnar argues that if the market prices in more inflation, interest rates will continue to rise, and this will likely cause high-flying growth stocks to return to the ground. This is in line with Kadnar's investment framework, which as he describes to Harrison is dependent on mean reversion in the long-run. Kadnar is not a believer in gold but notes that if real rates become sufficiently negative, gold begins to make more sense within a portfolio. Filmed on February 23, 2021. Key learnings: Kadnar believes that value stocks will likely outperform growth stocks over the long-run. He argues that Treasury bonds do not offer the same protection from equity drawdowns that they once did, and as such, he is constructive on asset backed-securities to play this role.
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The Essential Conversation is the world's premier financial-market-focused conversation series. The smartest people in markets, finance, economics, and business engage in deep-diving discussions about the global macro landscape, generating actionable takeaways that can help your decision-making process. Tune in to peer-to-peer conversations between the brightest minds in the investing world, and tune up your portfolio.
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This content is reserved for the thousands of visionaries supporting the financial revolution. We'd love for you to join us. Interested?
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