What are fund manager's outlook for the future of investing?
The experts view
It is always interesting to note what fund managers are saying, especially with regard to the future. In these unprecedented times it will come as no surprise that they highlight that when looking into their crystal ball, that it has never been so cloudy, as at any past period over their investing lifetimes.
A recent online seminar gave some well-known and successful names in the investment trust world a chance to outline their views, some of which we share in the following paragraphs.
With Brexit now a reality, the thoughts of Alexander Darwall (who has run The European Opportunities Trust for many years) is a good starting point. He continues to focus on companies that have, what he believes a superior positioning and that have global exposure. A disciplined approach looks for the right company, taking into account management, long-term structural trends and valuation.
New challenges for him revolve around covid, debt, role of the state and the EU green deal. He highlighted areas of change such as alternative finance, digital technologies, healthcare and speciality foods.
Moving across to a global fund and to Bruce Stout the manager of Murray International with an aim to provide both income and growth. The virus as we are all aware has put significant pressure on dividends and future risks for him include the return at some point of inflation, the concentration risk in the US of the top 5 companies in the S&P 500 and valuation of the US against other world indexes.
Post covid he is factoring in higher taxes in the developed world, rising bond yields, lower growth and an increase in unemployment. Emerging markets he believes have a better growth outlook, allied to lower debt, the increase in middle-class, along with their rising purchasing power.
Not surprisingly Andrew Ness who runs Templeton Emerging Markets agrees. They have 34 offices around the world providing on the spot information, helping lead to the view that emerging markets appear to be well positioned with regards to earnings and dividend growth, allied to valuations.
Other highlights include the fact that economies continue to diversify, a good level of innovation and technology, the increase in the financial clout of consumers, less debt compared to some developed countries, development of online services and improvements in corporate governance.
Yes, covid challenges remain for the health care system and economy, but corporate earnings have been resilient and the new administration in the US might lead to calmer relationships with certain countries.
Finally, to Alex Wright who runs Fidelity Special Values. A contrarian with a focus on stock selection in the UK. He takes the view that investor biases make them slow to recognise change among unloved companies. He wished to highlight the many attractions that he sees in the UK, especially when compared to the rest of the world.
Merger & acquisition activity rose over 2020 and that trend he thinks could continue this year. Although not making a call on any macro outcome, following what he states as an unusual recession, with some households increasing savings and strength in some areas of the economy, instead his focus will remain on individual stories and the fund has raised gearing because of these perceived increased opportunities, especially in the smaller cap area.
The Brexit deal and vaccine roll-out will also help he believes bring about a re-rating for the UK and boost confidence.
The investment trusts mentioned all come out with a monthly fact sheet on their websites where further information can be easily obtained.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.