‘a lot of runway’
Why this money manager still believes in buying the dips.
Alex Lane, portfolio manager at Dynamic Funds, believes buying the dips in equity markets will keep paying off despite the recent declines.
“There is a lot of runway for equities as they haven’t seen inflows for many years,” he said. “Now that is starting to change, as we’re seeing a shift from preservation of capital to earning returns responsibly.”
This environment of “rising optimism,” although still very tentative, comes amid what Lane considers the very early stages of a secular bull market. “Investors are still wary of the stock market and nowhere near the euphoria that marks market tops,” he said.
As a result, the Dynamic Power Global Navigator Class is positioned in “new leadership” areas that also did well when the U.S. was strong in the
Manager Profile
Manager: Alex Lane, Dynamic Funds Fund: Dynamic Power Global Navigator Class Description: Go anywhere, do anything global growth fund Manager’s AUM: >$3.5-billion Performance: 1-year: 18.3%; 3-year: 9.5%; 5-year: 10% (Class A, as of Aug. 31, 2014) MER: 2.59% 1990s, including industrials, technology, consumer-related companies, health care and market-sensitive financials.
“The counter-trend bounce in ‘old leadership’ areas of commodities, emerging markets and interest-rate sensitives has now run its course,” Lane said. “Growth has been outperforming value since the end of April.”
The manager belie ves growth will play a major role throughout most of this bull market, which he thinks has more than a decade to run.
Lane, who also runs the Dynamic Power Canadian Growth Fund and the Dynamic Power Balanced Fund, expects Canada will underperform during this period, adding that his very negative view of the Canadian dollar translates into an unhedged portfolio.
He noted the S & P/TSX composite index has already begun to lose a lot of relative momentum compared to U.S. benchmarks.
“We have had a preference for the U.S. all year as it is leading the recovery, but we do believe Europe, led by the U.K., is set to re-accelerate on the back of a weaker euro, central bank stimulus and improving confidence,” Lane said. “Japan also appears to be moving again on a weaker yen, which should drive exporters higher.”