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Principal Global Investors Unlocks the Future of Capital Markets

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The future of capital markets may be impossible to predict, but it is possible to identify trends likely to impact capital markets in the coming years, according to Jim McCaughan, CEO of Principal Global Investors, in the new paper “Unlocking the Future of Capital Markets.”

“Like a sort of financial physics, the world exerts a force on capital markets at least equal to the force that capital markets exert on the world,” writes McCaughan. “So when we broaden our gaze to include happenings outside of the investment realm, we can identify forces that will affect them.”

McCaughan explores broader societal trends and hones in on four forces likely to have a significant impact on capital markets:

  • Demographics - Seismic demographic shifts are occurring around the world, and aging populations are increasingly looking for income.
  • Urbanization and Re-urbanization - People are also on the move. In the emerging world, what had been primarily rural populations are now moving into urban areas for employment opportunities and a chance at a middle-class lifestyle. In the developed world, the trend of suburban living is reversing, with potentially dramatic impacts.
  • Structural Oversupply of Commodities and Manufactured Goods - There seems to be too much stuff. The global economy appears to have developed a structural excess of both manufactured goods and commodities, which could have significant influences on inflation expectations for years to come.
  • Technology and Infrastructure - Finally, advances in technology have the chance of drastically altering our relationship with our infrastructure system.

“Just like the headlights of a car on a foggy night give us a decent idea of where that car is headed in the next few seconds, these trends can give us a glimpse of the likely path capital markets could take in the coming years,” said McCaughan. “Our responsibilities, as participants in those markets, are to examine that evolution, follow those trends and challenges, and most importantly, develop solutions for the future.”

About Principal Global Investors
Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group(R), with expertise in equities, fixed income and real estate investments, as well as specialized overlay and advisory services. Principal Global Investors manages $342.9 billion in assets1 primarily for retirement plans and other institutional clients2.

About the Principal Financial Group
The Principal Financial Group(R) (The Principal(R))3 is a global investment management leader offering retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500(R), the Principal Financial Group has $530.3 billion in assets under management4 and serves some 19.9 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

1 As of Mar. 31, 2015.

2 Principal Global Investors is the asset management arm of the Principal Financial Group(R) (The Principal(R)) and includes the asset management operations of the following subsidiaries of The Principal: Principal Global Investors, LLC; Principal Real Estate Investors, LLC; Principal Enterprise Capital, LLC; Liongate Capital Management LLP; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors; Edge Asset Management, Inc.; Morley Financial Services Inc.; Finisterre Capital, LLP; Origin Asset Management, LLP; Principal Global Investors (Europe) Limited; Principal Global Investors (Singapore) Ltd.; Principal Global Investors (Australia) Ltd.; Principal Global Investors (Japan) Ltd.; Principal Global Investors (Hong Kong) Ltd.; CIMB-Principal Islamic Asset Management Sdn. Bhd.; and the majority owned affiliates of Principal International, Inc. Assets under management includes assets managed by investment professionals of Principal Global Investors under dual employee arrangements with other subsidiaries of The Principal and assets managed in accordance with investment advice provided by Principal Global Investors through the delivery of a model.

3 “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

4 As of March 31, 2015.

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