Global credit funds & CLO's
July 2020 | Issue 225
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Managers prepare for new habits in post-lockdown world
July 2020 | Issue 225
Sayed Kadiri headshot
Sayed Kadiri
Editor
A new world beckons as lockdown measures gradually loosen; one in which consumer behaviour has changed and credit investing will have to adjust. But it won’t be as easy as compartmentalising investments into ‘covid sectors’ and ‘non-covid sectors’.
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“Working from home is a catalyst,” says Elissa Johnson, portfolio manager at Janus Henderson in London. It has helped create new consumer habits and created idiosyncratic risks.
“Take cinemas, for example. This crisis may accelerate by many years the decline in that sector. Will families want to spend £50 on a cinema experience, or have they grown accustomed to family movie nights via streaming?”
But she says people may still value other types of leisure, such as theme park experiences that get them out of the house.
“Working from home is a catalyst”
Elissa Johnson, Portfolio manager | Janus Henderson
London-based futurist Richard Watson says that, although there will be changes to our behaviour, it’s human nature to go back to the old routine. “Memories are short. We will revert to previous behaviour in the blink of an eye,” he says. “Society has a strong desire to get away and consign lockdown to the past, so we will likely see more domestic holidays. Short-haul flights may not be deemed worth it so if we are to get out of the country it will be for far away places.”

Watson says that other high quality pursuits will be in favour, such as escapist entertainment including immersive cinema experiences and drive-in music festivals. These could come at the expense of similar budget experiences.

Technology has been the big winner over the past three months, with companies relying on tech to keep workforces engaged. For example, Alcentra has prioritised communication and transparency, both for investors and staff, according to the firm’s London-based president and chief operating officer Dan Fabian.

He says that the firm is doing bi-weekly calls with investors and has shifted from weekly to daily internal investment team meetings and calls. “We’ve probably overdone the communication, but it’s important to try to recreate those office conversations that take place when you overhear snippets of information that turn into ideas,” Fabian says.

He adds that staff have adapted, which means there is no great pressure to reopen offices. It also means that working from home may become more regular for Alcentra staff.

Watson thinks people will work from home more, but companies will not close offices en masse. “We crave human interaction so the buzz and social benefits of working in an office still have a purpose,” he says.
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