Politics is about what should be.
Investing is about what is.
It has always been important to separate one’s political views from one’s investment portfolio. Politicians’ goals typically attempt to support some vision of a better society. Investors’ goals are to maximize returns. These two goals can sometimes go hand-in-hand, but they often do not.
At RBA, we have portfolios that have specific mandates or guidelines outlining acceptable investments. Constraints such as minimum and maximum asset weights, volatility limits, country limits, or ESG restrictions are embedded in various RBA portfolios. However, where there aren’t such limitations, our sole goal is to aim for the best risk-adjusted return we can for our investors.
If investors give us a restrictive mandate, then we of course manage to that mandate. However, when there isn’t a restrictive mandate it is simply not our job to opine on politics.
For example, we were decidedly overweight Energy, Materials, and Industrials sectors as the global economy emerged from the pandemic despite some investors’ ESG concerns. Similarly, today we see significant opportunities in China despite some investors’ geopolitical concerns.