Simon Doyle is outgoing CEO and CIO, Schroders Australia.
James Gruber: 22 years at Schroders, most of it as Head of Fixed Income and Multi-Asset and more recently as CEO and CIO, and 38 years in the finance industry – firstly, congratulations on a great career.
Simon Doyle: Thank you.
JG: What are the biggest changes that you’ve seen in the finance industry over the past four decades?
SD: There are some things that haven't changed. When I started, a large proportion of the organised savings pool was with institutions like AMP and National Mutual. Then the industry went through a period of change with more players like asset consultants and global fund managers helping to break portfolio down, make them more global and encourage the evolution and introduction of more alternatives. 30-odd years later, we now have small number of very large superannuation funds managing large pools of assets. In some ways, we've gone full circle. The same thing is being done, but just different players are doing them.
One of the things that I've observed as an investor that has changed, is the nature of the business cycle. We've gone from a relatively normal four-year cycle - economies grew, overheated, contracted, got stimulated by policy (both monetary and fiscal) and grew again. Today, with more service-based economies and the rapid development of technology, it’s had a profound impact on the nature of the business cycle. Coupled with that, policy makers, both on the monetary and the fiscal side, working hard to continue to support growth in economies. Fiscal policy settings in key economies are almost always now pro-cyclical.
The traditional business cycle is very different to what it was in the past and that's having quite a significant impact on how investors think about investing.
Outside that, private markets have come to the fore recently. There's always been private markets and direct assets in investor portfolios but a lot narrower in terms of assets and the access for investors has been quite constricted as well. We've seen a broadening out of types of private and non-traditional exposures that investors can access, and also how they can get access those investments as well.
The other thing I'd call out is just ease of access – we’ve gone from an environment of contractual mandates and unitised trusts which to the evolution of ETFs which has opened up alternative access and for improved ease of access. Technology has enabled small investors and young investors to access markets in smaller size introducing them to investing quite early.
JG: I want to drill into a couple of your points there. In terms of the business cycle, is it now dead, as some suggest?
SD: I think it's dead, or if not severely wounded, in the traditional, policy driven context that we used to have. Economies would slow down, central banks would stimulate, governments would spend money, economies would grow, then you'd see fiscal contraction as they’d look to keep budgets in balance, and monetary policy would tighten to reign in inflation and so on.
Fiscal policy has is now more structurally pro cyclical, and a lot of pressure has been placed on monetary policy to manage inflation. That's one side of it.
The other side is economies have shifted from being production and commodity based to much more service based. And the services sector is a lot less cyclical.
And then technological innovation has changed the nature of what people spend money on, and how they spend.
So I think it's permanently changed.
JG: Private credit has been in the headlines a lot over the past few weeks. What’s your view on its rise?
SD: I don't think there's anything wrong with private credit per se. We've been involved in private credit and are involved in private credit in different capacities, locally and globally.
It's like anything - once too much money flows into a segment of the market, lending standards loosen, and some of this lending will flow to activities that will struggle to pay investors back. And that's just a consequence of the growth of that segment.
Quality always matters, and high-quality private credit businesses, that have strong credit process and lending discipline, should be structurally fine. You have just got to make sure you do your homework and the underlying assets and the credit frameworks are sound.
A broader debate is the role of private credit and private assets in portfolios. I've always thought portfolio construction needed to be thought about differently to the mainstream 70/30 or 80/20 equity-bond portfolio.
It's why we went down the path of developing a Real Return fund to play what's ahead of us, not play what's behind us. I always think about asset classes as a fresh set of opportunities and asking questions about which assets will deliver for me going forward, rather than just extrapolating from the past.
There are times where you want to own lots of equities, but they'll also be times where you don't.
Getting true diversification in portfolios is a lot harder than just simply adding bonds to a portfolio.
JG: What do you consider your main achievements at Schroders?
There are two things I look back on with the most pride. One is the development of our objective-based Multi-Asset Investment Framework back in 2006-07 that led to the Schroder Real Return strategy and other strategies that utilize this investment framework like the Schroder Global Target Return strategy – a USD version of the approach.
Why am I most proud of that? That type of investment approach didn't really exist in Australia at the time. We unpicked the rules of multi-asset portfolio construction, built an investment framework, and started constructing portfolios in a different way, helping clients at the time to solve a problem, which is: how do you generate positive absolute returns, irrespective of the performance of equity markets?
We launched that strategy in the middle of the Global Financial Crisis and it's been a hugely successful strategy for us and is still resonating with clients 18-years later under Sebastian Mullins very capable leadership.
The second thing is that I didn't really expect to be CEO of Schroders Australia. When I took the role, we were trying to do a lot of things, and probably not doing some of those things as well as we really wanted to be doing them. And so taking the business on at that point in time, narrowing our focus, working out what we were good at as a firm, as an active investment manager, having much more focused conversations with our clients about those things, and seeing that translate into strong business outcomes has been an achievement that I'm proud of.
In 2025, we had our best year in fund flow terms since 2013 and for investment performance, most of our focus strategies have been performing really well.
JG: What are some of the key lessons you’ve learned about markets and investing along the way?
SD: I've learned plenty. First is that when you think you've got to it all sorted out, markets will come along and teach you a lesson.
Second, while I hugely respect contrarian thinking and the discipline of searching for what can go wrong (it’s a large part of our business here and overseas), I've learned - and I think we’ve learned as a firm - that being perpetually bearish can be as costly as being blindly optimistic. The key is knowing when skepticism is warranted versus when it becomes an anchor on performance. Markets reward patience and the conviction to act when others won't - but sustained success requires balancing that vigilance with the willingness to recognize opportunity.
From a personal perspective, and linked to the above, I believe resilience is key. You're not always going to be right. If you're right more than you're wrong, you're doing well in this business.
If you have a set of beliefs about how markets work, you construct a framework for thinking about investing that aligns with those beliefs, and you consistently apply that, at least you have a reference point for decision making and your clients know what is driving your thought processes.
That, if nothing else, leads to consistency. Process, aligned to beliefs and consistently applied, is critical.
JG: How do you see markets today and what investors should be paying attention to?
SD: There's a lot of focus on inflation. I draw a distinction between inflation being structurally higher than where it has been versus structurally high inflation that derails market valuations.
I think we're in an environment where inflation is structurally higher at 3-4% as opposed to what people have been accustomed to, at 2-3%.
We’ve seen the Reserve Bank raise rates, and there’s been a lot of angst about that in in the media. But the reality is at 3.85% rates against an economy that's growing in nominal terms at perhaps 5%, rates are still pretty low. We’re just seeing rates normalise from exceptionally low levels and they’ll likely push a bit higher.
For markets overall, I think there’s plenty of optimism in current valuations. They are being supported by growing economies and and a pro-growth policy environment, but it wouldn't take a lot to go wrong.
So that leads me to be quite cautious. While there’s a lot of talk about the risks, they're certainly not factoring that into market pricing.
JG: Let's talk about Australia. There's a fair amount of pessimism about Australian markets, especially in a global context. Do you share that pessimism?
SD: Not really. There are certainly some challenges.
When you look at Australia, it's a relatively narrow market – primarily commodities and financials - and you have a lot of money flowing into the market through passive investments, and the large, organised savings pools looking to own Australia. That's probably inflated valuations in some segments.
If you compare that to offshore, you've still got valuation challenges in a lot of markets but there's a broader set of opportunities.
Investors here are typically overweight Australian assets in their portfolios, and need to look at broader diversification, including more exposure offshore. But that's different to being pessimistic about Australia.
Australia is still a high-quality economy with an independent central bank, and good fiscal governance compared to much of the rest of the world. There's a lot to be positive about.
Simon Doyle is outgoing CEO and CIO, Schroders Australia, a sponsor of Firstlinks.
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