HOW TO INVEST DURING A BEAR MARKET
An angry bear market can create considerable investment opportunities
The latest stock market volatility once again drove home the importance of being invested in top-rate funds. Not only have they done well over the long term, but they have proved extremely resilient over the past three months.
Most leading asset managers would probably agree that global investors are simply repricing stocks to ref lect a more honest picture of earnings, options and the future. It’s not the end of the world.
In addition, top managers offer a wea lt h of i nvest ment opt i ons, including the provision of professional management at an affordable price. Indeed, t hey make small i nvestors beneficiaries of global expertise rather than being dependent on the proverbial ‘around the corner know-alls’.
In this edition we highlight some of these. Two included in the Old Mutual offering are Peter Linley’s R14bn Investors Fund, one of the biggest and oldest in the industry; and Peter Brooke’s Edge 28 Life Fund, which has turned in a phenomenal annualised return of 17.8% in its f irst three years.
Coronation founder member and former CIO, Louis Stassen, gives us an insight into his recently launched Global Equity Select Fund, the result of several years of preparation. It has a strong developed market bias but is f lexible enough to include some exposure to the exceptional growth potential offered by emerging markets.
We a l so i nter v iewed i mpressive i ndustry players, Allan Gray’s new chairman, Ian Liddle, and deputy CIO, Andrew Lapping. They provided some unusual insights into their operation. Perhaps predictably, they insisted that they’ll continue to do things right, and set extremely demanding standards for themselves.
In the ongoing active managementpassive management debate, Prudential CEO Bernard Fick presents excellent arguments for select active management in SA. His house, in the active management camp, has consistently outperformed market indices over long periods of time, net of fees. This, of course, has been made possible by, among other factors, exploiting short-term mispricing of assets.
We have consistently given coverage over the years to alternative assets, and were delighted to receive an article from Stanlib Thought Leadership head, Gillian Jones. Greg Babaya, the house’s infrastructure franchise head, co-authored it. Stanlib’s infrastructure funds are ideal for large institutional funds, seeking predictable risk-return profiles.
The Stanlib Infrastructure Yield Fund, for instance, has a low correlation to the business cycle, offers diversification to an investment portfolio and is a good inf lation-hedge, as the income streams are usually inflation linked.
As a parting remark, I urge you not to get swept away by the present market hype. If you make a long-term commitment to invest, you should stick with it for the long-term, and not allow emotional nightly TV viewing and/or gossip to push you out of the market. Patience is rewarded.
Although unit trusts can provide attractive returns over long periods of time, they don’t necessarily provide them each and every year. And you can’t predict in which years they will or will not perform.
Enjoy the read.