The Ninth Public Investors Conference

12–13 September, 2024
Singapore

The last several years have presented unprecedented challenges for public investors. The detrimental effects of the pandemic and recent geopolitical conflicts have led to new expansionary fiscal policies. In addition, the subsequent sudden surge in inflationary pressures triggered, in some major currency areas, a rapid tightening of monetary policy. Higher real interest rates and the contraction of central banks' balance sheets have added to the cost and quantity of debt. These events may have caused structural changes with an impact on global financial markets that is difficult to assess. Meanwhile, the sense of urgency surrounding climate and nature-related risks has increased, prompting investors to intensify their efforts to integrate the climate risk dimension into their investment processes. Here, public investors have assumed a critical role in favouring the transition toward a sustainable economy Altogether, these developments have introduced additional trade-offs in asset allocation decisions.

It is in this context, that the Ninth Public Investors Conference will be convened from 12 to 13 September 2024, to explore a variety of related issues, with particular emphasis on the following:

• New methodologies for risk-return modelling that incorporate financial risks in the current environment:

Financial models may be biased by the post-Great Financial Crisis environment and may be inappropriate for a period of persistently higher interest rates. How can the risk of higher rates and shrinking central bank balance sheets be better incorporated into risk and return models? What are the appropriate models and risk factors to account for the shifting behaviour of asset returns under different trajectories of long-term interest rate regimes? Are there additional factors to be incorporated, such as fiscal or health policies, the regulatory environment, geopolitics, or de-globalisation? What steps have public pension plans and sovereign wealth funds taken to address ongoing structural trends such as demographics?

• Integration of sustainability considerations into the investment process:

How can the impact of sustainability considerations on the expected returns and risks of assets best be assessed? How can risk management be enhanced to incorporate sustainability factors? How can asset allocation models be affected by sustainability considerations, going beyond the classical wealth maximization framework? How should data quality and heterogeneity issues concerning sustainability factors be handled? How do we model nature and biodiversity risks?

• Robust asset allocation and asset-liability models for public investors:

Can portfolio construction and risk management models more nimbly incorporate shifts in economic or financial regimes, including the possibility of higher structural inflation related to de-globalisation, and transition costs to a more sustainable economy? How can public investors, including central banks, incorporate prospective liability considerations into strategic asset allocation? Do private assets bring benefits to public investors' strategic asset allocation? How may discount rate models cope with the interest rate environment and the uncertainty surrounding the future path of interest rates?

• Artificial intelligence developments and their application to portfolio construction as well as investment and risk management

Can artificial intelligence – including machine learning, deep learning, large language models, and reinforcement learning – be applied to portfolio construction, risk management and other areas of relevance to public investors? How would public investors make sense of the wide range of views on the feasibility and pervasiveness of technological developments more generally for portfolio allocation? Are there implications from other emerging technologies for public investors?