None of us is naturally comfortable with uncertainty. We prefer some sense of direction, such as a set of expectations or map that helps us understand what may lie ahead and how we might respond. Think about ordering an Uber. We choose the type of vehicle we want, see an estimated arrival time and then watch the driver’s route unfold on a map. The map does not make the car arrive any faster but reduces the anxiety of the uncertainty of when the driver may arrive.

Investing, unfortunately, does not come with the same kind of map. Financial markets are complex, constantly changing and shaped by forces that cannot be predicted with certainty. But successful investing is not about eliminating uncertainty. Instead, it is about navigating uncertainty through thoughtful decisions in spite of it. This article explores a set of decision-making principles designed to help investors navigate uncertainty with greater discipline, confidence and perspective.

Decision-making principles

Decision-making is often viewed as choosing between alternatives, but the real value lies in the process that precedes the choice. Effective decision-making requires clarity about objectives, an understanding of the available options and a careful assessment of the potential consequences. It is less about finding the “right” answer and more about making choices that can withstand changing circumstances. A robust process helps distinguish between actions that are merely appealing today and those that remain resilient over time.

In investing, uncertainty is unavoidable. Success does not come from predicting the future with precision, but from making decisions that can perform across a range of outcomes. By applying disciplined principles around forecasting, risk-taking, diversification, behavioural awareness and managing groupthink, investors can build portfolios and decision frameworks that are better equipped to navigate whatever the future may bring. Uncertainty never disappears, but a strong decision-making process can transform the unknown from a possible threat into something that can be managed.

Principle 1 – Understand the role of predictions

Every investment decision is a prediction. Whether we realize it or not, allocating capital reflects a view about how the future may unfold. The challenge is that the future is unknowable. That is why the goal of prediction is not accuracy for its own sake, but better decision-making. Predictions help investors assess possibilities, weigh probabilities and make more informed choices in an uncertain world.

The key is recognizing that investing is a game of probabilities, not certainties. Rather than asking “What will happen?”, investors should ask “What could happen, and how should I prepare for it?” That shift in mindset can lead to more resilient portfolios and better long-term outcomes.

Principle 2 – Take risks deliberately

The most successful investors understand that uncertainty is a permanent feature of markets and that avoiding risk altogether is often the greatest risk of all. Instead, they take risks deliberately, focusing on opportunities where the potential reward justifies the uncertainty and constructing portfolios that can withstand a range of outcomes. Predictions play a vital role, not because they reveal the future, but because they help investors evaluate probability, challenge consensus views and identify where expectations may be misplaced. Risk management then takes over, ensuring the portfolio remains robust even when those predictions prove wrong. The combination of the two creates a powerful framework for navigating uncertainty. Think of it as prediction being about reducing uncertainty, while risk management is about succeeding despite it.

Principle 3 – Diversification needs to work harder

Diversification matters, but it cannot be set and forgotten. The recent period of rising inflation and bond yields was a reminder that equities and bonds can fall together, and that bonds may protect if growth weakens, but not if inflation expectations rise. Many investors have moved beyond equities and bonds introducing a component of alternative investments, but these are not without their own challenges in times of stress. The point is not to own a bit of everything; instead, the decision should be to know why you own each exposure, what returns it delivers or what risk it mitigates and whether you are still being rewarded to invest in it.

Principle 4 – Understand the impact of emotional influence

Investors spend considerable time trying to understand markets, economies and companies. Yet some of the most important drivers of investment outcomes come from within. Fear can magnify risks. Optimism can overlook them. Confidence can create conviction, but it can also create complacency. Understanding these emotional forces is a critical part of successful decision-making.

The objective is not to remove emotion from investing, but to recognize its influence. Investors who develop emotional awareness and discipline are often better positioned to make consistent decisions, remain committed to long-term objectives and navigate uncertainty without being driven by it. This is where emotional intelligence can contribute to more successful investment outcomes.

Principle 5 – Beware of groupthink and overconfidence

The quality of a committee’s decisions is often determined not by how quickly it reaches agreement, but by how effectively it challenges its own assumptions. Groupthink and overconfidence can emerge when optimism goes untested. Mental contrasting provides a practical antidote. By asking committee members to envision both the most desirable realistic outcome and the obstacles that could derail it, the conversation shifts from confirmation to exploration. This approach not only improves the quality of decisions but also encourages constructive dissent, strengthens governance and fosters a culture where challenging ideas are viewed as a contribution rather than criticism.

Principle 6 – Appreciate the benefit of adaptability

In practice, adaptability can take many forms: reassessing capital market assumptions, refining portfolio positioning, revisiting liquidity needs or updating governance processes as conditions evolve. Adaptability is often the bridge between a sound strategy and successful outcomes. While no investor can foresee every economic shift or market disruption, those who remain flexible in their thinking and disciplined in their decision-making are better equipped to respond to changing conditions. In an uncertain world, the ability to adapt may be just as valuable as the ability to forecast.

Navigating uncertainty

The future will always be uncertain. Success belongs not to those who predict it most accurately, but to those who are best prepared for the many ways it may unfold. Uncertainty is not a temporary condition that investors must endure until markets become clearer. It is a permanent feature of investing. The challenge is not to eliminate uncertainty but to make sound decisions despite it.

While forecasts, models and analysis can improve our understanding of what may lie ahead, they cannot provide certainty about the future. The most successful investors recognize that investment success comes from building robust decision-making processes that acknowledge uncertainty, evaluate probabilities and remain adaptable as the latest information emerges. This requires taking risks deliberately, diversifying with purpose, challenging assumptions, encouraging constructive debate and maintaining the discipline to adjust when the facts change.

The post Navigating uncertainty: A framework for better investment decisions appeared first on Groupe financier Connor, Clark & Lunn ltée.

Artificial intelligence (AI) is often discussed as a technology challenge, but its successful adoption is fundamentally a leadership and business transformation challenge.

In this recent Human Resources Director article, Ankur Saxena, Director, Technology Strategy, and Diana Bartolic, Head of Human Resources, share their perspectives on why AI enablement requires more than new tools and technology. It requires dedicated leadership, effective governance, thoughtful change management and a focus on helping people adapt as roles and ways of working evolve.

As Ankur notes, AI is “largely a business change impact initiative and less of a technology initiative.” Diana highlights the importance of supporting employees through a period of significant workplace transformation and ensuring organizations have the right structures in place to navigate change responsibly.

At CC&L Financial Group, we believe creating long-term value from AI means investing not only in technology, but also in the people, processes and leadership needed to make adoption effective, responsible and aligned with business objectives.

Read the full article: AI enablement officer: the new sheriff in transformation town

The post AI is less about tech and more about business: Ankur and Diana weigh in appeared first on Groupe financier Connor, Clark & Lunn ltée.

Peter Muldowney a corédigé, pour Plans & Trusts, un guide pratique à l’intention des administrateurs de régimes de retraite et d’avantages sociaux. L’article présente des mesures concrètes pour cerner, évaluer et gérer les risques, tout en protégeant la réputation des régimes, en renforçant leur résilience et en préservant leur valeur à long terme.

Veuillez noter que cet article est écrit en anglais.

The post Un guide pratique de la gestion des risques d’entreprise appeared first on Groupe financier Connor, Clark & Lunn ltée.

Investor views on China have become increasingly polarized, creating both challenges and opportunities for active managers. While concerns about economic growth, geopolitical tensions and market regulation continue to shape sentiment, China’s scale and importance within the emerging markets universe make it difficult for investors to ignore.

In a recent interview with Benefits and Pensions Monitor, Michael Mortimore discusses the factors influencing China’s investment outlook and why a selective, fundamentals-driven approach remains essential in today’s environment. He explores the structural challenges facing the Chinese economy, the implications for investors and the developments that could help support a more sustainable path forward.

As Michael explains, “If China was able to reinvigorate domestic demand and also curb the incentives that basically fuel all this excess capacity, we think that that would be a really, really positive development and really bullish for long term prospects for China as a whole and the sustainability of its economic model.”

Read the full article for Michael’s perspective on navigating uncertainty, evaluating risk and identifying long-term opportunities in one of the world’s most consequential investment markets: Is China still worth the risk for emerging market investors?

The post China beyond the headlines appeared first on Groupe financier Connor, Clark & Lunn ltée.

Investor views on China have become increasingly polarized, creating both challenges and opportunities for active managers. While concerns about economic growth, geopolitical tensions and market regulation continue to shape sentiment, China’s scale and importance within the emerging markets universe make it difficult for investors to ignore.

In a recent interview with Benefits and Pensions Monitor, Michael Mortimore discusses the factors influencing China’s investment outlook and why a selective, fundamentals-driven approach remains essential in today’s environment. He explores the structural challenges facing the Chinese economy, the implications for investors and the developments that could help support a more sustainable path forward.

As Michael explains, “If China was able to reinvigorate domestic demand and also curb the incentives that basically fuel all this excess capacity, we think that that would be a really, really positive development and really bullish for long term prospects for China as a whole and the sustainability of its economic model.”

Read the full article for Michael’s perspective on navigating uncertainty, evaluating risk and identifying long-term opportunities in one of the world’s most consequential investment markets: Is China still worth the risk for emerging market investors?

The post China beyond the headlines appeared first on Groupe financier Connor, Clark & Lunn ltée.

The Fed’s latest semi-annual Monetary Policy Report to Congress contains a paragraph discussing recent trends in the M2 money measure, included, apparently, at the behest of Chair Warsh.

In follow-up Q&A, Chair Warsh explained that he is not a “monetarist” but nevertheless holds the “old-fashioned view that monetary policy has something to do with money”.

Meanwhile, perhaps not coincidentally, former Fed Governor Miran has co-authored a paper that attempts to rehabilitate the P* monetarist approach to inflation forecasting.

P* is the level of prices implied by the current money stock, incorporating assumptions about trend GDP and velocity. The gap between P* and the prevailing price level P is a measure of future inflationary (or disinflationary) pressure. Miran et al present estimates of the price gap based on M2 and other (Divisia) money measures, showing that these gaps exhibit a statistically significant relationship with future inflation.

Both the Fed report and the Miran paper suggest that current monetary trends are non-inflationary. The former notes that annual M2 growth averaged 4.7% in the first five months of the year, which is “closer to the range typically observed in the 2010s”, when inflation undershot the 2% target.

Similarly, the current price gap estimates presented by Miran et al are all around zero, implying that “the stance of monetary policy is quite close to neutral right now, putting neither upward nor downward pressure on the inflation rate”.

A cynic might wonder if the appearance of these references to monetary trends has been motivated by a search for arguments to push back against a strengthening case for policy tightening based on conventional economic data (reflected in the Fed policy direction model discussed in previous posts).

In any case, the assessment that current trends are unthreatening may soon be out-of-date. Year-to-date annual M2 growth of 4.7% conceals a pick-up in six-month expansion to a 7.1% annualised pace in May. The broader M2+ measure calculated here rose by 8.2% over the same period – see chart 1.

Chart 1

The recent acceleration suggests that the Miran et al price gap estimates are now positive.

By contrast, six-month growth of the Bank of England’s M4ex broad money aggregate was 4.4% annualised in May, with the non-financial M4 measure preferred here rising by just 2.8%.

The Bank’s quarterly Monetary Policy Report (or Inflation Report before November 2019) contained no mention of money between May 2019 and May 2023, a period during which annual non-financial M4 growth reached 16.0%. A reappearance in August 2023 coincided with the annual rate of change turning negative. Editions in May 2024 and May 2025 included boxes discussing broad money developments in detail.

Still, there is no evidence from the minutes that monetary considerations have played a role in any decisions of any MPC member. Regular references to money trends are, it appears, little more than a box-ticking exercise. The same will likely be true at the Fed.

The post A cynical view of central bank money-speak appeared first on Groupe financier Connor, Clark & Lunn ltée.

The Fed’s latest semi-annual Monetary Policy Report to Congress contains a paragraph discussing recent trends in the M2 money measure, included, apparently, at the behest of Chair Warsh.

In follow-up Q&A, Chair Warsh explained that he is not a “monetarist” but nevertheless holds the “old-fashioned view that monetary policy has something to do with money”.

Meanwhile, perhaps not coincidentally, former Fed Governor Miran has co-authored a paper that attempts to rehabilitate the P* monetarist approach to inflation forecasting.

P* is the level of prices implied by the current money stock, incorporating assumptions about trend GDP and velocity. The gap between P* and the prevailing price level P is a measure of future inflationary (or disinflationary) pressure. Miran et al present estimates of the price gap based on M2 and other (Divisia) money measures, showing that these gaps exhibit a statistically significant relationship with future inflation.

Both the Fed report and the Miran paper suggest that current monetary trends are non-inflationary. The former notes that annual M2 growth averaged 4.7% in the first five months of the year, which is “closer to the range typically observed in the 2010s”, when inflation undershot the 2% target.

Similarly, the current price gap estimates presented by Miran et al are all around zero, implying that “the stance of monetary policy is quite close to neutral right now, putting neither upward nor downward pressure on the inflation rate”.

A cynic might wonder if the appearance of these references to monetary trends has been motivated by a search for arguments to push back against a strengthening case for policy tightening based on conventional economic data (reflected in the Fed policy direction model discussed in previous posts).

In any case, the assessment that current trends are unthreatening may soon be out-of-date. Year-to-date annual M2 growth of 4.7% conceals a pick-up in six-month expansion to a 7.1% annualised pace in May. The broader M2+ measure calculated here rose by 8.2% over the same period – see chart 1.

Chart 1

The recent acceleration suggests that the Miran et al price gap estimates are now positive.

By contrast, six-month growth of the Bank of England’s M4ex broad money aggregate was 4.4% annualised in May, with the non-financial M4 measure preferred here rising by just 2.8%.

The Bank’s quarterly Monetary Policy Report (or Inflation Report before November 2019) contained no mention of money between May 2019 and May 2023, a period during which annual non-financial M4 growth reached 16.0%. A reappearance in August 2023 coincided with the annual rate of change turning negative. Editions in May 2024 and May 2025 included boxes discussing broad money developments in detail.

Still, there is no evidence from the minutes that monetary considerations have played a role in any decisions of any MPC member. Regular references to money trends are, it appears, little more than a box-ticking exercise. The same will likely be true at the Fed.

The post A cynical view of central bank money-speak appeared first on Groupe financier Connor, Clark & Lunn ltée.

Peter Muldowney co-authored a practical guide to enterprise risk management for boards overseeing pension and benefits programs, published in Plans & Trusts. The article outlines actionable steps to identify, assess and respond to risk while protecting plan reputation, resilience, and long-term value.

The post A practical guide to enterprise risk management appeared first on Groupe financier Connor, Clark & Lunn ltée.

Is China still worth the risk for emerging market investors?

In a recent interview with Benefits and Pensions Monitor, Michael Mortimore discusses how investors should think about China’s role within emerging market portfolios, the associated risks, and the importance of maintaining a disciplined investment approach.

Michael notes that that while China’s late-2024 stimulus triggered a brief rally in consumer stocks, the momentum faded fast and conviction that Beijing will stand behind household spending has eroded. Of this he says “Consumer demand and consumer sentiment looks incredibly weak and deflationary.”

 
Read the full article

The post BPM speaks with Michael Mortimore about China’s challenges and opportunities appeared first on Groupe financier Connor, Clark & Lunn ltée.

What is the Sustainable Finance Disclosure Regulation?

The Sustainable Finance Disclosure Regulation (SFDR) was introduced by the EU Commission as a core component of its 2018 Sustainable Finance Action Plan. As a key pillar of the EU Sustainable Finance agenda, SFDR aims to improve transparency, prevent greenwashing and help investors make informed sustainable investment decisions. To do so, the SFDR introduced mandatory disclosure requirements around environmental, social and governance (ESG) metrics at both the entity and the product levels.

An imperfect system

Since taking effect in March 2021, the SFDR has faced implementation challenges and criticism from market participants. In a 2023 consultation, the EU Commission found that 83% of respondents believed the regulation was being used as a product label and marketing tool, rather than solely as a disclosure framework. Respondents highlighted several concerns, including greenwashing risks linked to inconsistent product classifications, unclear definitions, limited ESG data availability and higher compliance costs. Together, these challenges have made implementation more difficult and limited SFDR’s ability to provide transparent, comparable information on sustainable investments.

This has prompted the EU Commission to consider revisions to the framework, culminating in the draft SFDR 2.0 proposal.

Is it the end of Article 8 and 9?

Not quite. Rather than eliminating these categories altogether, the proposal replaces the existing Article 6/8/9 disclosure framework with a revised product classification system that introduces clearer definitions, eligibility criteria and sustainability thresholds.

What might change?

Contribution requirement

• One of the most significant proposed changes is that at least 70% of a fund’s assets would need to satisfy the sustainability criteria of its chosen category, whereas the current SFDR provides managers with greater flexibility to determine the applicable threshold.

Transition (Article 7)

• This entirely new proposed category, Transition, is intended for funds investing in companies that are on a credible pathway towards improved sustainability performance.

ESG Basics (Article 8)

• To qualify under the category of ESG Basics, investments would generally need to satisfy at least one of several sustainability tests such as: outperforming the benchmark on ESG ratings or key sustainability indicators, demonstrating improved sustainability characteristics or meeting minimum sustainability standards. This marks a significant shift from the current framework, replacing the broad flexibility currently afforded to managers with more standardized qualification criteria.

Sustainable (Article 9)

• The Sustainable category remains the highest sustainability classification and is expected to be subject to the most stringent eligibility criteria. Although there is broad support for maintaining this as the highest sustainability category, negotiations continue around how sustainable investments should be defined in practice.

Mandatory exclusion criteria

• Under the current regulation, investing in an ESG or sustainable fund does not necessarily prevent exposure to controversial sectors, such as fossil fuels, tobacco or prohibited weapons. Under the proposed SFDR 2.0 framework, mandatory exclusion criteria would apply across all sustainability categories, with the scope and stringency of exclusions increasing for higher-ambition categories.

These proposed changes would work to ensure that a fund could substantiate its sustainability claim with clearly measurable criteria, assuaging greenwashing risks.

Where do negotiations stand?

The legislative process is progressing rapidly. The EU Council published its negotiating position in June, while the European Parliament is expected to adopt its position shortly. Once both institutions have finalized their positions, trilogue negotiations with the European Commission will begin alignment on the final SFDR 2.0 framework.

Implementation timeline

The trilogue negotiations are expected to begin this autumn. While the timing remains uncertain, the legislative process is likely to extend through 2027, followed by a transition period before the new rules apply. Based on the current timetable, SFDR 2.0 is unlikely to become applicable before 2029, although the exact implementation date will depend on the pace of negotiations and the final transition period.

What does this mean for investors?

While the final rules are still being negotiated, the overall direction is becoming increasingly clear: sustainability claims will need to be supported by more objective and measurable criteria. An analysis by Clarity AI estimates that around 40% of current Article 9 funds would not meet the proposed exclusion rules of the highest sustainability category. 80% of Article 8 funds would experience the same challenge.

For asset managers and investors, these reforms could materially affect how sustainable funds are designed, marketed and compared, making the final outcome particularly relevant for investment strategies with ESG objectives. Funds currently designated as sustainable under Article 8 or 9 may need to be strategically revisited with portfolio or policy adjustments if the intent is to maintain the same designation levels.

At Global Alpha, we are following these developments closely. While SFDR 2.0 remains subject to negotiation, the direction is clear: sustainability claims will increasingly need to be supported by objective, measurable criteria. We will continue to monitor the legislative process and its implications for the sustainable investment landscape as the final framework takes shape.

The post Beyond the label: How SFDR 2.0 could redefine sustainable funds appeared first on Groupe financier Connor, Clark & Lunn ltée.