​Join CFA Society Salt Lake for Investing in Innovation and the Opportunity for Allocators.

In light of the globe’s response to COVID-19, monetary and fiscal policy have responded very swiftly and forcefully as faltering economies threatened to trigger widespread financial distress. The “shape” of economic recovery has yet to be determined; however, the nature of the recovery is often unimportant for subsequent market performance.

In this most recent downturn, we believe, the market has clearly differentiated between innovative secular growers versus economically sensitive and cyclical names. The economy is increasingly shifting to a more binary story with two types of companies – Innovators or The Disrupted; as many companies are vulnerable to the disruptive effects of innovation.

Risk-based and behavioral-based biases, which have caused many investors to misprice and underestimate innovation, have resulted in the “Innovation Premium,” a corollary to the “Value Premium”, which has both academics and investors befuddled.  In this discussion we will explore how investors can best harness the Innovation Premium and the disruptive power of these themes within portfolios.