Transformational leaders come with the ability to encourage, inspire and motivate employees to perform in ways that create meaningful change (be it operational or financial) within an organisation. A “Transformational Leader” can help the workforce to innovate and shape an organisation’s future success.

According to organisational change and leadership development expert Kevin Ford, while “Tactical Leaders” focus on solving straightforward problems with operations-oriented expertise and “Strategic Leaders” remain future-focused with an ability to maintain a specific vision while forecasting industry and market trends, “Transformational Leaders” focus less on making decisions or establishing strategic plans, and more on facilitating organisational collaboration that can help drive a vision forward.

Leaders aren’t confined to a single leadership style. In many cases, combining different approaches can enhance organisational outcomes. Take “Transactional Leadership” as an example, which is based on a system of exchanges between the leader and each employee. Employees receive positive reinforcement for meeting specific goals.

In contrast, “Transformational Leaders” inspire employees in ways that go beyond exchanges and rewards. They work towards increasing a team’s intrinsic motivation by expressing the value and purpose behind the organisation’s goals.

Important Traits Of A Transformational Leader

Ability To Embrace Uncertainty

What COVID-19, global inflation and the resultant interest rate hikes, and last but not the least, escalations in geopolitical conflicts have taught us is that there is no solid ground, when it comes to estimating where a business will stand in the next few years.

Changes occur swiftly, sometimes overnight, requiring project plans to adapt or face failure. Those who resist change and uncertainty will struggle to keep pace.

If a business possesses a fearless transformational leader (or a bunch of such individuals), they remain in a safe space, as the person gets excited about setting out for new lands while drawing the maps along the way. He/she practices agility and constantly looks to the future to plan (or modify plans) accordingly, when it comes to assessing various operational risks, market headwinds and drawing out a suitable progress path (or stay ahead of the carve) compatible with the business environment.

They Run Towards The Problem

A firefighter who runs away screaming from a burning building will likely find themselves out of a job. Some roles demand that you roll up your sleeves, put on a fireproof suit, and confront the chaos head-on.

To bring order to this chaos while moving quickly requires a strong desire to create structures and measurements. This mindset involves breaking down problems into causal chains and understanding networks of relationships. By synthesising these components, one can identify multiple paths of least resistance when quick decision-making and problem-solving are necessary.

“Transformational Leaders,” while dealing with chaos, also thrive on personal growth, as they get to know their strengths and weaknesses. They often take time to reflect and set daily or weekly goals, with the firm belief of everyone, including themselves, should be continually learning and improving.

They also handle headwinds better than others by indulging in proactive decision-making, rather than playing the waiting game.

They Possess Vision While Building Teams

Building a great team requires finding dynamic utility players, and requires going beyond grabbing the cleanest cookie-cutter resume. In fact, the well-treaded path is rarely where you find the right people.

If a company needs to identify a “Transformational Leader,” it needs to see an individual’s potential beyond what his/her LinkedIn profile narrates. Businesses, when it comes to hiring for leadership roles, should need to watch out for people with a wide range of varied experience that has provided them with a reservoir of general intelligence and an aptitude for succeeding at doing novel things.

A business writer who is an expert in a specific niche area may not be helpful to a company’s project on paper, but if he/she can take that analytical framework and port it over to the business’ data strategy and technology architecture, it will end up helping the venture in the long run.

A former hockey coach who only focuses on hockey may not seem like a fit for a consulting role. However, someone who understands how to build effective teams and guide individuals to perform at their best can be a valuable asset for driving a global team in a remote work environment.

Businesses need to seek individuals with strong problem-solving skills and a proven track record of addressing new or challenging situations, even if those challenges are unexpected.

When building a team that will tackle problems that may not yet be clearly defined, it’s essential to prioritise candidates with high levels of executive capacity and emotional intelligence. They will need to lead diverse groups of people in stressful situations and be able to translate various concepts and perspectives into effective solutions.

Transformational Leaders Foster A ‘Why Not?’ Environment

Transformational leaders foster a culture of continuous improvement and are never satisfied with the status quo. This mindset drives both businesses and their leaders toward success. They prioritise quality and do not compromise it for mere novelty. When communicating this message, it’s important to convey that this is the expected standard of performance. However, if anyone has a better approach, they are encouraged to share it.

Additionally, if someone is stuck on a similar issue, remind them of the saying, “The definition of insanity is doing the same thing and expecting different results.”

Encourage the exploration of new ways to address the problem.

Transformational leaders consistently ask themselves and their teams, “What are we really trying to accomplish?” and “What is our ultimate goal? Let’s forget about the methodology for now.” They break down problems thoroughly and do not stop until they gain a fresh perspective.

Simultaneously, they are comfortable admitting that they do not have all the answers. While they remain confident in their goals and abilities, they keep their egos in check and prioritise what is best for their team and organisation.

Such Leaders Come With Soft Skills

Soft skills go beyond someone having a certain leadership style to accommodate his/her staff. They’re what determine whether the team is willing to go into battle with its leader or not.

Compare two bosses: one is tough and demanding. Productivity is high, but people on the team are stressed and overwhelmed. The other boss is equally as demanding but makes time every day to chat with each team member about their life. He/she even takes them out weekly for happy hour/s. They respect and trust her, and therefore, are more willing to put in the hard work she requires.

Authenticity is essential. We all possess unique quirks, limitations, strengths, and weaknesses. It’s important to be genuine and to encourage authenticity in others. Ultimately, you hired intelligent and dynamic individuals, so it’s vital to honour the commitment to fostering authentic professional relationships with them.

Transformational leaders focus on understanding what their team members need and want. They make their managerial job about enabling the team’s success. They remain open to new ideas and fresh perspectives. Rather than jumping to conclusions, these leaders regularly gather feedback and ideas from a range of sources before making strategic decisions.

They Understand And Respect Technology

It is essential to communicate the message “no Luddites allowed” clearly among your team and incorporate it into your culture. We live in a highly technological world, and having an interest in, appreciation for, and understanding of how technology works is vital. This mindset is a key indicator that everyone is aligned on the importance of continuous learning, embracing new subjects, and having a willingness to explore and understand the systems at play.

Transformational leaders understand the above-mentioned reality, and they hire a well-balanced team of tech-savvy people who understand both the intricacies of the technology as well as the importance of it from a business perspective. Transformational leaders speak all of the languages used by their team, including tech.

They focus more on building a core trusted team (individuals who worked together successfully before), which can keep the project on track and minimise personnel conflicts. Going into a new, large-scale business transformation, no manager can simply do everything himself/herself. So transformational leaders bring with them the people they know will work in productive ways, understand the organisation’s expectations, and cover as much territory as quickly as possible.

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March 17, 2017: CAMRADATA, a leading provider of data and analysis for institutional investors, has published its latest investment research reports charting the performance of investments and asset managers in Q4 2016 across six asset classes, including Global Equity, Emerging Markets Equity, UK Equity, Diversified Growth Funds, Multi Sector Fixed Income and Emerging Markets Debt.

Over three years’ worth of data from CAMRADATA Live (its online data platform) at December 31, 2016 was analysed to produce the reports and some key investment trends emerged.

The fourth quarter saw bond valuations fall as inflationary expectations picked up and the increase in US interest rates put upward pressure on global yields.

However, most equity markets continued to perform well, particularly in the financial and energy related sectors, and the oil price recovered. US equities performed well over the quarter, with the S&P 500 Index returning 3.8%.

UK equities performed in a similar fashion, the FTSE All-Share Index returning 3.9% over the quarter, reaching an all-time high at the end of the year. European equities also performed strongly over the quarter, the FTSE World Europe (ExUK) Equity Index returning 6.0%.

Commenting on the data, Sean Thompson, Managing Director, CAMRADATA said, “US equities remained buoyant over the fourth quarter, despite uncertainty about the US presidential elections and Trump’s subsequent victory dominating the news agenda. UK and European equities all showed strong performance. In the UK, we saw that fears about the potential negative economic impact of the Britain’s decision to leave the EU have receded, with domestic growth rates exceeding expectations and consumer spending remaining resilient. However, sterling fluctuated over the period, falling sharply in early October after suggestions from the Prime Minister of a ‘hard Brexit’, but it recouped some of its losses after the Bank of England upgraded UK growth projections, and the High Court ruled parliamentary approval was required to start the EU exit process.”

Thompson points out that while Donald Trump’s proposals to boost fiscal spending were largely seen as a positive for the US economy, suggestions of increasingly protectionist trade policies have had a detrimental effect on some Emerging Markets.

Diversified growth funds

DGF products saw the lowest quarterly inflows of 2016 in Q4 2016, standing at £3.3bn across the universe. However, 2016 has the highest inflows overall for the last three years totalling £28.2bn.

Q4 2016 continued to see an increase in positive performance outcomes within the DGF universe, with nearly 68% of products achieving a breakeven or positive return.

Looking at the three-year spread of annualised returns; all bar one product achieved a breakeven or positive return. The lowest annualised return produced is -1.1% and the best performing product achieved 15.97%, giving a spread of around 17%pa between the top and bottom performer.

UK equities

Whilst the UK equity universe achieved positive return in Q4, the asset class continued to see outflows with £2.8bn having been withdrawn during the quarter. In fact, the last time the UK equity universe saw a positive net inflow was in Q1 2014.

Although the UK equity universe saw negative asset flows in Q4 2016, the range of quarterly returns saw just over 90% of products achieving a breakeven or positive. The lowest quarterly return produced is -4.24% and the best performing product achieved 12.34%, giving a spread of over 16.58% between the top and bottom performer in just one quarter.

The range of annualised returns for the 3 years to December 31, 2016 saw all products achieve a breakeven or positive return. The lowest annualised return for this period is 1.28% and the best performing product achieved 12.77%.

Global equities

The global equities report tells a different story. Despite growth and good returns, investors reduced their allocation in the market for the 6th quarter in a row, with outflows during Q4 totalling $1.6bn.

Q4 2016 saw a decrease in the number of managers producing a breakeven or positive return with just fewer than 50% of products achieving this; this is down from 97% in Q3 2016. The lowest return produced is -9.12% and the best performing product achieved is 11.67%.

In comparison, looking at the three-year period, 94% of managers achieved a breakeven or positive annualised return, with the range of annualised returns starting from -9.2% and the best performing product achieved 12.32%.

Emerging market equities

Q4 2016 witnessed a largely negative range of returns in the emerging market equity universe with less than 5% of managers achieving a breakeven or positive return.

Moreover, when looking over a three-year period, only 29% of managers achieved a breakeven or positive return in this asset class. The lowest return achieved was -6.93% and the highest was 15.3%, highlighting the importance of the asset manager selection process in this asset class.

Multi-sector fixed income

The Multi Sector Fixed Income (MSFI) market continued to post positive results. The Assets under Management (AuM) in the MSFI Absolute Return universe sits at just under £76bn as at December 31, 2016. In Q4 2016, MSFI Absolute Return products achieved positive inflows of just under £2.3bn across the universe.

For the second quarter running, Western Asset Management had the largest asset inflows totalling £375m, in converted sterling. BlueBay Asset Management LLP achieved the largest percentage growth, seeing its assets increase by 29.69% over the same period.

In the MSFI market, nearly 77% of products achieved a breakeven or positive return in the fourth quarter. Whilst 97% of products achieved a breakeven or positive return over a three-year period, highlighting that the MSFI Absolute Return universe continues to show positive outcomes.

Emerging market debt

The emerging market debt products also experienced negative flows across the fourth quarter, with net outflows of just under £6.7bn across the universe. This made it the sixth quarter in a row that experienced negative flows. That said, there were some asset managers who saw inflows during the quarter.

Less than 5% of products achieved a breakeven or positive return in the EMD universe this quarter whereas nearly 70% of products achieved a breakeven or positive return over a three-year period.

The lowest return reached in Q4 2016 was -7.35% and the best performing product achieved10.19%, giving a spread of just over 17.69% between the top and bottom performer.

The range of annualised returns for the 3 years to December 31, 2016 in EMD is –6.2% to 10.37%, giving a spread of 16.57% between the top and bottom performer, which highlights the importance of the asset manager selection process in this asset class.

Sean Thompson concluded, “Our investment reports provide critical data and analysis on the latest investment trends. This information is vital given the continued volatility in the markets and the fact that markets are still adapting to the new political and economic landscape in the USA. In Europe, the Brexit negotiations and elections in the Netherlands, France and Germany will also have an impact on global markets.”

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January 12, 2017: CAMRADATA, a leading provider of data and analysis for institutional investors, has collated the top 10 global investment trends for 2017 from a range of its asset management clients.

Sean Thompson, Managing Director, CAMRADATA says, “Our asset management clients have predicted that 2017 will be an extremely interesting year for investors. We are in a midst of a sea change in the global environment that will create both opportunities and risks.”

The top investment trends for 2017 from asset management firms:

A year of volatility in global markets

The political uncertainty in both the USA and Europe following the election of Donald Trump, Brexit negotiations and the forthcoming French and German elections are all going to have a big influence on the markets and continued volatility.

According to Mark Burgess, Chief Investment Officer EMEA and Global Head of Equities at Columbia Threadneedle Investments, “2017 will be a year of volatility as markets make sense of the promises and policies that politicians have promoted, and that volatility in markets provides the perfect opportunity for active management.”

Steven Bell, Chief Economist at BMO Global Asset Management EMEA, believes that Trump’s victory will be the ‘key driver of change’ and that the global economy is starting to heal. “A number of key indicators suggest that the world’s economy has been healing for some time. Monetary policy has played an effective role in this healing process but seems to have reached its limits with negative rates having disappointing effects in Europe and Japan. The baton should be passed to the fiscal authorities and Trump looks set to run ahead with it. Whether other countries will follow suit remains to be seen.”

Interest rate rises and falls

Most companies are predicting interest rate rises in the USA, but a fall in emerging markets.

Ricardo Adrogué, Head of Emerging Markets Debt at Barings, says, “Over the next year, global interest rates will likely move in different directions. As the US economy continues to gain steam, rates will likely increase while Europe and Japan appear on track to continue their accommodative policies. On the whole, EM local interest rates continue to fall as inflation remains healthy and growth remains tepid.”

Global inflation on the rise

Ricardo Adrogué, Head of Emerging Markets Debt at Barings, says, “Global inflation may rise but will likely remain relatively subdued over the next several years. Due to the lower inflationary pressures, we expect to see lower overall interest rates for EM local bonds where nominal yields offer significant compensation for risk.”

Bonds poised for solid performance

Robert Tipp, Managing Director, Chief Investment Strategist and Head of Global Bonds at PGIM Fixed Income, says, “Between the Brexit vote and the Trump sweep, 2016 was a year of surprises and bumps, but it was a generally productive year for the bond market. And, when we look at 2017, our best guess is that the opportunity in the bond market will once again outweigh the risks and that bonds are poised for solid performance.”

Embracing credit risk

Jan Straatman, Global CIO at Lombard Odier Investment Managers (LOIM), and Salman Ahmed, Chief Investment Strategist at LOIM, point out that in the world of largely low or negative rates, investors should consider increasing their exposure to credit risk through an allocation to corporate credit in 2017.

However, they say investors need to look beyond the higher-rated, investment-grade segment of this market where duration risk is a dominant force.

They comment: “We believe that to increase yield sufficiently, investors should move further down the credit spectrum. In our view, the so-called ‘crossover’ universe, which spans the lower quality investment-grade (BBB) and higher-quality high-yield (BB) rated issuers, provides significant return enhancement relative to investment-grade issuers while not exposing investors to the excessive default risk that is a feature of high-yield debt (rated B and below).”

Growth of global equities

The move into equities is another key trend.

Mark Burgess, CIO EMEA and Global Head of Equities of Columbia Threadneedle Investments, says, “Compared to their longer-term history, equities still offer better value than bonds – though this might change, should the ‘bond bubble’ burst in 2017.”

Steven Bell, Chief Economist at BMO Global Asset Management EMEA, says, “Higher US rates and a strong US dollar will see markets struggle to make much headway and although equities are our favoured asset class, stronger economic data could see bonds rally and shares fall at some point. In terms of sectors, recent trends look set to continue with cyclically orientated areas outperforming and bond proxies struggling. The prospects for emerging markets remain difficult as dollar strength and rising rates outweigh the benefits of better growth. But 2017 might be the year in which European equities finally outperform, ending half a decade of disappointment.”

Impact of technology

Technology will also have a significant impact in 2017.

According to Richard Turnill, Global Chief Investment Strategist at BlackRock Investment Institute, “Technological change is sweeping through industries, overhauling business models, reducing traditional jobs and limiting inflation. The rapid pace of technological change is causing disruption across industries and displacing jobs − and is arguably fuelling populist politics.”

Advances in artificial intelligence could have an even bigger impact on better-paying white-collar jobs in services industries such as finance. And fossil fuel companies risk being upended by renewables once energy-storage technologies improve.

Tony Kim, Portfolio Manager at BlackRock’s Global Opportunities Group says, “Artificial intelligence (AI) is the new electricity. The big bang is upon us. We have all this data, but we can’t do anything with it. AI is the solution.”

Opportunities for active investors to increase

Mark Burgess, CIO EMEA and Global Head of Equities at Columbia Threadneedle Investments, predicts that 2017 will be an active time for investors, and expects opportunities for discerning investors to increase. “Amid rising political uncertainty, fundamental analysis and expert asset allocation will be critical in order to achieve long term returns. The tide of global QE that had previously lifted all boats will begin to ebb in some regions and flow in others, and in that environment it will make sense to differentiate within and across asset classes.”

Challenges in Asia and Emerging Markets

Burgess predicts challenges for Asia and the Emerging Markets (EMs) that are exposed to the threat that Trump poses with protectionist policies. These include China, Mexico, Colombia, Malaysia, Korea and Thailand.

BlackRock Investment Institute also highlights China and the worries around China’s capital outflows and falling yuan. However, they also say China’s stabilising growth has eased some of the anxiety that rattled investors in early 2016. Nevertheless, there are still challenges ahead as ‘China is attempting a difficult balancing act: prioritising near-term economic growth while tackling debt issues for the longer-term good’.

Emiel van den Heiligenberg, Head of Asset Allocation at Legal & General Investment Management (LGIM), points out one of the key risks for 2017 is a significantly weaker Chinese currency driven by capital leaving the country. “Our base case is that the Chinese will manage a 5% real currency fall at the cost of lower foreign currency reserves and tighter capital controls, particularly given the Communist Party’s power transition in late 2017. We do not expect a sharp slowdown in growth. However, the risk of a faster devaluation is not immaterial and, as we saw in 2016, that would likely lead to weaker global equity markets.”

Major challenges in Europe

John Greenwood, Chief Economist at Invesco Ltd, predicts the challenges in Europe will lead to poor economic growth. The slow progress of bank resolution, the weakness of the European Central Bank’s (ECB) QE programme and the consequent descent into negative interest rates are among the headwinds holding back economic recovery.

He also highlights double-digit unemployment levels, leading to disruptive populist and xenophobic political movements, and referenda or elections in Italy, Holland, France and Germany. “At some stage, one or more of these electorates could overwhelm the governing elites, posing an existential threat to the established order – the European Union (EU) or even the Eurozone. Real GDP growth is likely to remain around 1.5% at best, with inflation falling far short of the ECB’s target of ‘close to but below 2%’.”

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July 19, 2016: CUSIP Global Services (CGS) announced the release of its CUSIP Issuance Trends Report for June 2016.  The report, which tracks the issuance of new security identifiers as an early indicator of debt and capital markets activity, suggests a steady issuance of new corporate and municipal debt offerings over the next several weeks.

Total CUSIP requests for all US and Canadian corporate securities reached 3,864 in June, up 9% from May monthly totals. Within that broad asset class, there were 797 security identifier requests for new US corporate debt issues, a decline of 9% from May, and 304 CUSIP request for Canadian corporates, a 20% increase over the previous month. On a year-over-year basis, corporate CUSIP request volume for both debt and equity asset classes across the US and Canada was down 0.3% through June 2016 versus June 2015, reflecting weak volumes in January 2016 and comparatively strong issuance volumes in the early part of 2015.

The volume of requests for new municipal CUSIP identifiers saw a fifth consecutive month-to-month increase in June.  A total of 1,754 new municipal bond identifier requests were made over the course of the month, a 1% increase from May.  On a year-over-year basis, municipal bond identifier requests were up 1.3% in June.

Regionally, municipal bond issuers in Texas demanded the highest volume of new CUSIP identifiers in the first half of 2016, accounting for a total of 1,013 identifier requests during the period.  Texas was followed by New York (774 CUSIP requests) and California (656 CUSIP requests).

“While the month-to-month growth rate of new CUSIP requests in the corporate debt and municipal bond market has slowed from the break-neck pace we were seeing earlier in the year, we’re still seeing indications of very steady new issuance volume for the coming months,” said Gerard Faulkner, Director of Operations for CUSIP Global Services.  “As we turn the corner to the second half of the year, we expect the CUSIP indicator to be a telling signal for the market appetite of major debt and equity issuers.”

International debt and equity CUSIP International Numbers (CINS) were mixed in June. Requests for new international debt CINS were down 9%, while requests for new equity CINS were up 48%.  On a year-over-year basis international debt CINS were down 30% and international equity CINS were down 61% through June 2016.

“Given all of the uncertainty in the global economy right now, it’s actually quite amazing that CUSIP request volume has stayed so strong,” said Richard Peterson, Senior Director, S&P Global Market Intelligence. “Clearly, issuers across several asset classes still see an attractive environment for raising new capital and that sentiment is continuing to show up in our CUSIP request data.”

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