“What drives equity fundamentals right now is the lack of growth and so people are being forced to chase the highest growing assets.”
Nevertheless, the next 12 to 18 months could look rather more appealing as markets benefit from a recovery, according to Mr Ejikeme.
Investors are facing two distinct time horizons: the long-term and the medium-term cycle.
While growth is scarce in the long term – where a core holding in assets with a proven track record of delivering growth, such as the Nasdaq Stock Market and tech, quality and defensiveness is essential – the mid-term means investors will be faced with a cyclical rebound.
This is where macro-sensitive equities yet to price in recovery, like emerging markets, will profit.
He continued: “Each cycle lasts about three to four years; on average the way up it is going to be 18 to 24 months and another 18 to 24 months on the way down.”
To make the most of the cyclical rebound, investors would do well to choose the equity style suited to each phase of the cycle.
To do this, they must recognise which phase they are in and focus on what comes next.
“If you are already in a recession then that is your least risky thing to worry about, so if you are buying defensive assets now, what you really should be worried about instead is what comes next: recovery.”
But he pointed out that human minds cannot cope with cycles and that “when we are at the bottom we think we are going to be in a recession forever, when we are at the top we think we are going to be in recovery forever”.
But recession, or the capital preservation phases, is not something to be scared of – it is the new norm until growth improves in the long term.
Mr Ejikeme said: “If you live outside of the US, you live in Europe or the emerging markets, you have experienced at least two or three recessions since the global financial crisis.
“We are going to have recessions every three to four years now until we sort out a way out of the growth slump we are in.”
Investing in the decade ahead
Also speaking at the event, Henry Boucher, deputy chief investment officer and fund manager at Sarasin, explained climate change is one of the biggest economic and political challenges of the century, meaning investors will have no choice but to look beyond their carbon footprint to explore the potential impact of stranded assets on investments.
But Mr Boucher pointed out that investing in the growing environmental, social and governance landscape is “not just about reducing exposure to the risks of climate change”, as some investors are re-weighting their portfolios to capitalise on the range of low carbon companies that offer better long-term stability and profitability.