29 April 2022

Bonds are not forever

by Russel Chesler, Director, Investments & Portfolio Strategy

The performance of developed market bond funds over the first three months of 2022 were among the worst quarterly returns on record. For decades, investors have relied on this asset class for their portfolios to help smooth stock market volatility. They have also been a useful tool to generate income, meeting retirement goals.

Now, bond funds are behaving like equity funds. Their prices are falling. Bond returns in 2022 are in line with risky assets, such as equities but with limited potential for capital growth.

With a view that interest rates will continue to rise in developed markets, bonds face headwinds.

Where in the world do bond investors go? The developed world is not enough.

14 April 2022

The Quality Wizard of Oz

by Cameron McCormack, Portfolio Manager

Buying ‘quality’ companies seems an intuitively straightforward path to investment success. However, definitions of quality vary. As such, so do the outcomes of various quality strategies. What is agreed however is that quality investing aims to identify those companies with durable business models and sustainable competitive advantages. Why? Those companies best weather downturns and outperform in low growth environments. An analysis of the quality factor in Australia illustrates, like when Dorothy’s dog Toto pulled away the curtain to reveal the Wizard, you may not get the quality you expect.

01 April 2022

Stagflation – returning or not?

by Arian Neiron, CEO & Managing Director - Asia Pacific

After Russia’s invasion of Ukraine, economists became more concerned about the risk of stagflation. For many people this may have been the first they heard that term. They were not alive in the ‘70s, when stagnation last reared its ugly head. The ‘stag’ they know is a male deer. Strong and majestic. The ‘stag’ of stagflation, derives from the Latin stagnare, meaning form a pool of standing water. In other words, stagnant water. It can be unpleasant. Whether it is coming or not, investors can position for it.

18 March 2022

Investing through the seasons

by Cameron McCormack, Portfolio Manager

Summer is over. Leaves have started falling off the trees, Autumn is here. Seasons are inevitable. Change is constant..

The economic cycle also follows a similar pattern. There are four seasons and there are four stages of the economic cycle. The four stages of the economic cycle however do not last for a set three months. The waves of the economic cycle varies in length and in magnitude and this makes it unpredictable. Change and unpredictability is a feature of markets..

The challenge for investors is finding the investment to suit the season. Alternatively, even, the investment that suits all seasons. This is, if such an investment exists.