Janus Henderson Live: Actively navigating geopolitical realignment
At the Janus Henderson London Investment Conference, experts discussed the implementation of 2025’s new political environment on portfolios and highlighted strategies to help position for a brighter investment future.
2 minute watch
Key takeaways:
- De-dollarisation, the preparedness of corporates for tariffs, and tech pricing power have been key trends in 2025.
- Shifting global dynamics have emphasised the need for strategic portfolio adjustments and an actively managed approach.
- With significant stock dispersion in markets like technology and smaller companies, there is strong potential to generate outperformance by separating the wheat from the chaff.
Active investing: An investment management approach where a fund manager actively aims to outperform or beat a specific index or benchmark through research, analysis, and the investment choices they make. The opposite of passive investing.
Alpha: Alpha is the difference between a portfolio’s return and its benchmark index after adjusting for the level of risk taken. This measure is used to help determine whether an actively-managed portfolio has added value relative to a benchmark index, taking into account the risk taken. A positive alpha indicates that a manager has added value.
De-dollarisation refers to countries reducing reliance on the US dollar as a reserve currency, medium of exchange or as a unit of account.
Dispersion: The extent to which a distribution of data points is stretched or squeezed. If the data points cluster around certain values, then dispersion is low, whereas if they are more spread out, then dispersion is high. For example, dispersion in stocks measures the range of returns for a group of stocks. Higher dispersion opens up opportunities for stock pickers to outperform by selecting the winners and avoiding the losers, given that stock returns are spread more widely on either side of the benchmark.
Exchange traded fund (ETF): A security that tracks an index, sector, commodity, or pool of assets (such as an index fund). ETFs trade like an equity on a stock exchange and experience price changes as the underlying assets move up and down in price.
Passive investing: An investment approach that involves tracking a particular market or index. It is called passive because it seeks to mirror an index, either fully or partially replicating it, rather than actively picking or choosing stocks to hold. The primary benefit of passive investing is exposure to a particular market with generally lower fees than you might find on an actively-managed fund, the opposite of active investing.
Pricing power: A company has pricing power when it can raise prices regardless of the economic backdrop without losing to competitors, whether that is due to the unique nature of its product, or specific market demand.
Small caps: Companies with a valuation (market capitalisation) within a certain scale, e.g. $300 million to $2 billion in the US, although these measures are generally an estimate. Small-cap stocks tend to offer the potential for faster growth than their larger peers, but with greater volatility.
Tariffs: A tax or duty imposed by a government on goods imported from other countries.
Narrator: Janus Henderson Live, London Investment Conference.
Ignacio De La Maza: And if 2024 was the year of election, 2025 is the year of political implementation. But this is something that has been building up. And what we want to understand is what is the implication that this might have to your portfolio? And how we can take advantage of portfolio managers and active management into this reality that we’re experiencing today.
John Lloyd: The last one I put in there too is just this de-dollarisation trend. I think the US is still going to be the reserve currency. I think we heard that in the last panel. I don’t disagree with any of that, but on the margin, I think you’re seeing investors allocate away from the US.
Luke Newman: Tariffs, obviously during President Trump’s first administration, we got an understanding in terms of the mechanisms there, and I think corporates did as well. So, corporates have been a lot better prepared this time around. I know it’s been different. the new work for us was within the DOGE [Department of Government Efficiency] programme, so understanding which US corporates, but also European global corporates facing into the federal government in the US, could be under some pressure.
Richard Clode: I think for a lot of tech companies, they have the pricing power. And I would also argue, you know, we’re offering more for that price. If you look at a lot of other companies in the world, what have they been doing in the last few years? They’ve been price gouging. They’re charging you more for your chocolates, more for your chips, more when you go into a restaurant, more when you stay at a hotel, more for an airplane flight. And has your service got any better? At least with tech, we can offer you with more AI in it or something better in it. And that justifies a bit more of the price hike.
Richard Brown: Nick, we somewhat bizarrely in, in my view, we quite often see people allocate to the small cap market through a passive structure, an ETF structure. Keen on your thoughts of, you know, why you should go active in that space?
Nick Sheridan: Well, the easy answer is it’s the best place in the world to go active. There are 3,900 stocks. You cannot follow 3,900 stocks. If you do your homework in this area, it is the best area in which to create alpha.
Clode: I mean from our side; I think it’s several things that have changed and some things haven’t. So, you know, I think there is stock dispersion, you know as you were talking about and the haves and have nots. You cannot buy the tenth best AI training chip company and that’s just not going to be ever profitable and that stock’s not going to perform. So, you know, fundamentally, we think that it is a much more rational market and that’s great for stock pickers and that’s generally what a lot of us do here at Janus Henderson.
Narrator: At Janus Henderson, we are proud to partner with clients to help navigate change. We offer insight led investing and innovative solutions to help invest in a brighter future together.
These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
There is no guarantee that past trends will continue, or forecasts will be realised.
Marketing Communication.
2 minute watch
Key takeaways:
- De-dollarisation, the preparedness of corporates for tariffs, and tech pricing power have been key trends in 2025.
- Shifting global dynamics have emphasised the need for strategic portfolio adjustments and an actively managed approach.
- With significant stock dispersion in markets like technology and smaller companies, there is strong potential to generate outperformance by separating the wheat from the chaff.