This edition of Fund Focus is characterised by signif icant excellent analytical input, and not without good cause. Old Mutual chief economist Rian le Roux sets out a backdrop of major economic concern contrasting with peaking share markets.
Coronation’s Charles de Kock adv i s e s t hat when t here a r e f e w clearly great opportunities, investors shouldn’t get anxious about short-term underperformance. “We behave like the baseball player who has lots of time to pick the deliveries he wants to hit without fear of going out if he doesn’t take a swing at every ball.”
Looking at the pricing of the various asset classes today, it is not obvious where the ‘ fat pitches’ are, he says. “From an asset a l l ocation point of v i ew, no single asset class stands out as offering exceptional value. Opportunities will come; they always do. But until then be prepared to be patient and wait for the right pitch.”
Recently appointed Prudential CEO Bernard Fick says: “We’re neutral on domestic equities. They’ve run hard, become expensive and although they arguably still offer the highest real return expectation, they’re the most volatile and risky asset. Consequently, we’ve switched some recent capital gains to cash.”
Investec Equit y Fund manager Rhynhardt Roodt argues the case for a sound earnings revision strategy instead of aggressively following the ‘herd’.
He warns that an earnings revision strategy should not be confused with an earnings growth strategy. Like several other leading portfolio managers, Roodt is underweight industrials in the domestic economy and holds overweight positions in companies with large or expanding offshore operational exposure.
Old Mutual MacroSolution’s John Orford expresses a similar view. He says his house’s longstanding view is that global equities are currently more attractively priced and have the tailwind of gradually improving economic growth in the US to support earnings, and hopefully the same will apply in Europe.
Old Mutual Investments meanwhile has upgraded its Global Emerging Markets operation to a full franchise and its co-CEO Firoz Bassa believes that domestic investors should look to the GEMs for excellent opportunities that are simply not available locally. He gives several examples.
I’m sure that these and various other pointers from heavyweight investment houses such as Momentum, PSG Asset Management and Allan Gray will provide considerable food for thought.
Enjoy the read.