Author: Maha Khan Phillips
Stephanie Kelly, IMC is a Senior Political Economist at ASI Research Institute, Aberdeen Standard Investments.
As a Senior Political Economist working in the investment profession, Stephanie Kelly, IMC, believes it is important for asset managers to adopt political analysis into their investment thinking.
“Politics affects market pricing, and the rise of populist parties and systems has brought up unstable coalitions. We are so used to the sense that markets will just continue on, but for us, the three big risks are Brexit, and the rise of Italian populism in Europe, and more globally, someone like Donald Trump really challenges the idea that globalisation will continue,” she explains.
Kelly graduated from Trinity College Dublin with a master’s degree in international politics in 2014, and joined Standard Life Investments (now Aberdeen Standard Investments) as a global strategy intern in the firm’s multi-asset team. She quickly became a global strategy analyst, before taking on a role as political economist in 2016. She now heads up a separate research arm that looks at the impact of politics and policy on investment management.
“I was lucky that it was genuinely a case of being in the right place at the right time. There were people who were interested in looking at political risk, and in building a political risk framework for investing,” she explains.
Kelly devised a framework which considers twelves institutional and cyclical factors, ranging from those that are driven by different political systems, to cyclical risk such as the ideology of various political parties. “At the moment people are reading the headlines, and that is guiding how they think about markets more broadly. What people in finance don’t always get is that while we don’t have many numbers in politics aside from the polls, it doesn’t mean we don’t have the information we need,” she says.
Kelly works with investment teams to help them use her team’s analysis for better decision-making. “If you are a UK equity investor, Brexit will affect you differently than if you were a multi-asset fund manager, who may say I’m not going to take any risk here. We work with our UK equity team on Brexit and consider what the key questions are that any company needs to answer, for example, how large is their European consumer base, their UK work force, how many Europeans are employed, what contingency plans have been set in place for manufacturing. There will always be some companies that have done more thinking on this than others. It’s just a case of finding the opportunities and making political risk part of fundamental analysis,” says Kelly.
In her free time, Kelly, who was a finalist of the Women in Investment Awards 2018, volunteers for the Society, acting as a member of the CFA Scottish Committee. She helped set up the Gender Diversity Network in Scotland, and believes that the industry has become better at raising the visibility of gender issues, but still needs to do better. “It can’t be diversity for diversity’s sake. What you want is diversity of thought. It’s really important to get diversity of opinions, to have different socio-economic backgrounds, race, ethnicities, and religious beliefs. We need to work on that,” she argues.
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