Equities

The 2023 EY Global Wealth Management Research Report showed 37 per cent of Australian investors think managing their wealth has become more complex in the past two years, with nearly half reporting they are looking for more financial advice across investment services.

After posting a 16.6 per cent average annual return since 2014 and 31.8 per cent in FY20/21, the Cyan 3G Fund lost 35.8 per cent in FY21/22. So how does it feel, as a fund manager, when things head south in dramatic fashion? The fund’s co-founder, Dean Fergie, speaks to The Inside Network’s James Dunn.

The current economic cycle is too changeable to set any portfolio to autopilot, according to Mason Stevens’ Jacqueline Fernley. Counterpoints to conviction are needed, and the devil’s advocate should be your friend.

Value stocks have been big outperformers over the past three years, especially those in the cheapest part of the market, says Schroders’ Simon Adler. To avoid value traps, it’s key to do one’s research.

Although more Australian companies are paying dividends in 2023, many have reduced payouts, with the year-to-date total slightly behind 2022’s figures, according to CommSec research. The big miners are leading the cuts, while energy producers are lifting dividends to reflect record high gas prices.

Large language models like ChatGPT are part of a long technology continuum driven by Moore’s law, the observation that transistor capacity doubles every two years. To get in on AI’s surging growth, says Munro Partners’ Nick Griffin, investors should focus on the big – and not-so-big – names already poised to come out on top in the “race to shrink”.

Small cap investing has considerable upside, which the long-term returns data shows. But many small caps are less than quality grade, and the managers picking them can be rife with bias.

Shifting market dynamics mean some of the investment themes that worked in recent years are set to give way to new opportunities. Man Group’s Andrew Swan and Prime Value’s Richard Ivers recently discussed the promising outlook for Asia and small-cap stocks, where it’s all about fundamentals.

Valuing companies and their potential for growth is a slippery, convoluted process. Quality is a key metric, according to Loomis Sayles, but other factors play an equal role.

Dividend investing can be a good source of defensive income in volatile times, but changing fundamentals mean resources companies and banks may be the weaker play in 2023, with opportunities emerging beyond these traditional Australian dividend payers – although valuation will be key.

Eschewing the traditional route, Spatium Capital founders Nicholas Quinn and Jesse Moors grew their short-holding, long-only small companies managed fund from the seeds of a separately managed account.

Market neutral strategies should not only used as lever for investors that want an on-call safety valve for volatility, but retained as a strategic holding to drive portfolio performance throughout market seasonality according to Yarra Capital Management’s Andrew Smith.