Royal London Asset Management's Head of Equities, Mike Fox and Head of Global Equities, Paul Schofield, discuss their equity market capabilities and what may lie ahead for investors in 2025.

By Pete Carvill, Insurance Asset Risk

Insurance Asset Risk (IAR): What is Royal London Asset Management's equity investment philosophy and process?

Mike Fox (MF): Our philosophy is that investment teams are empowered to focus on their clients to provide the best possible solutions to their needs. This is done using powerful quantitative, research and portfolio construction tools which have a proven track record in finding mis-priced investments and building balanced portfolios.

We observe that market inefficiencies, which are the source of future investment performance are definable and slow moving, allowing investors to benefit from them.

IAR: As the new Head of Equities – how are you looking to evolve the team and Royal London Asset Management's equity capabilities?

MF: We are blessed with a number of industry leading equity franchises including our global equity and sustainable teams. These teams are led by experienced and talented investors who have a strong track record in delivering long-term investment performance. My role is to support them by continuing to evolve the tools we give them to deliver for their clients. The emergence of AI is an example of this, where much of the lesser value add work investment teams do can be automated, to allow them more time to think and analyse. Quantitative tools will also evolve rapidly as larger data sets and computing power allow deeper analysis to occur.

Overall, supporting defined investment teams by developing best in class tools is our way forward.

IAR: Are you positive about the global economic outlook for 2025 – and how will this likely impact the global equities market?

Paul Schofield (PS): There is a saying that as an equity investor you should either be bullish or very bullish. This recognises the fact that equity markets, back tested, go up about 75% of the time, and recessions since 1935 have been about 15% of the time. These numbers show it really doesn't pay to be a pessimist as an equity investor. Of course, there will be down years and some of those, like the financial crisis, will be significant. However, equity markets always recover in time as they benefit from the ever-rising tide of economic growth and innovation. We would say we are bullish for 2025. Economic growth remains strong and innovation is booming. There is a risk that geopolitics undermine this, but we don't think this should be the central case investors adopt.

IAR: What equity market capabilities can Royal London Asset Management offer insurance investors?

PS: We view our global equity investment approach very much as a solutions capability and we are continually listening to the changing demands and needs of our clients. This involves continually looking for ways to enhance systems, tools and knowledge.

We believe an investment approach which combines the processing power of technology, with the flexible insights of humans, is an effective route to exploiting market inefficiencies to deliver sustainable alpha for our clients. This agenda ultimately drives future strategy creation as our learnings and enhancements develop and iterate. Examples as to how this virtuous circle has worked in practice include our portfolio construction/risk enhancements, which have furthered our thinking around enhanced indexation outcomes for the most moderate risk/return budgets as an alternative to the traditional passive/smart beta approaches.

Past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested.

For more information on Royal London Asset Management and their equity investing strategies please visit www.rlam.com

For professional clients only, not suitable for retail clients.

This is a financial promotion and is not investment advice. The views expressed are those of the authors at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.

Issued in February 2025 by Royal London Asset Management Limited, 80 Fenchurch Street, London, EC3M 4BY. Authorised and regulated by the Financial Conduct Authority, firm reference number 141665. A subsidiary of The Royal London Mutual Insurance Society Limited.