PGIM: Plan sponsors look to OCIO managers for institutional investment expertise
New research from PGIM sheds light on the use of outsourced chief investment officers (OCIOs) by defined contribution (DC) plan sponsors.
NEWARK, N.J., May 12, 2020 - What will the world look like after the coronavirus? When global lockdowns end, as families and communities recover, new opportunities and challenges will emerge for companies—and investors—around the world as they navigate the economic, social and political shifts brought on by the pandemic, according to research from PGIM Inc., the $1.3 trillion global investment management business of Prudential Financial, Inc. (NYSE: PRU).
In “After the Great Lockdown,” more than a dozen PGIM investment professionals across fixed income, equity, real estate, alternatives, and asset allocation explore how the business models, strategies and actions of companies will need to adapt to thrive in a post-COVID-19 world.
“The structural changes unleashed by the Great Lockdown could transform the business landscape, creating new winners and losers around the world,” said Taimur Hyat, chief operating officer of PGIM. “Investors who anticipate these long-term transformations will be strongly positioned when the dust finally settles.”
PGIM believes four structural changes will reshape businesses for the long term:
A barbelling of global supply chains: Resilient, multi-regional supply chains in some sectors paired with a reshoring back to home markets in other sectors.
“Just in time” to “just in case”: A transition back from lean inventories to fat inventories, especially in capital goods, as companies balance higher costs with greater certainty around supply.
The continued rise of “weightless” firms: A dramatic acceleration of the trend towards firms built on capital-light, technology-heavy models and centered on investments in software, research and development, data and intellectual property.
A shift in real estate usage and footprints: A rethinking of the “live, work, play” urban real estate model and the coworking spaces that had powered the gig economy, with added momentum for logistics, cold storage and warehousing required to support the next wave of e-commerce and online retail.
While there are clear opportunities for companies that embrace these transformations, challenges abound—at least in the near term. Economically, the pandemic-induced global recession could reach a magnitude not seen since World War II, impacting employment, inflation, savings and investments for many quarters ahead. Socially, with minorities and lower-income households disproportionately affected, the coronavirus crisis will fuel the growing tensions from widening income and wealth inequality. And politically, the Great Lockdown will escalate the ongoing tussle between globalization and sovereignty as the need for a multilateral response is countered by the compulsion to shut borders down. PGIM’s investment professionals have explored many of these critical topics this year and throughout PGIM’s Megatrends research series.
For more on the new business realities and implications for investors after the coronavirus, read “After the Great Lockdown” at pgim.com/lockdown.
About PGIM and Prudential Financial, Inc.
PGIM, the global asset management business of Prudential Financial, Inc. (NYSE: PRU), ranks among the top 10 largest asset managers in the world* with more than $1.3 trillion in assets under management as of March 31, 2020. With offices in 16 countries, PGIM’s businesses offer a range of investment solutions for retail and institutional investors around the world across a broad range of asset classes, including public fixed income, private fixed income, fundamental equity, quantitative equity, real estate and alternatives. For more information about PGIM, visit pgim.com.
Prudential Financial, Inc. of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. For more information, please visit news.prudential.com.
*Pensions & Investments’ Top Money Managers list, May 27, 2019; based on Prudential Financial total worldwide institutional assets under management as of Dec. 31, 2018. Assets under management (AUM) are based on company estimates and are subject to change.