Lauren Ryan from Thinktank speaks to Laurence Parker-Brown for our IN60 series. The Inside Adviser
That consumers are influenced heavily by well known, trusted brands comes as no great surprise. What does, though, is that they rate life insurance as the least most important tool in ensuring financial security.
Currency key to investability, as shorts pay off
Among the most interested comments I’ve heard thus far in 2022 was from an actively managed global fund manager who said something along the lines of “the challenge in 2022 won’t be in outperforming the index, but rather in generating a positive return”. This was evidenced by renowned value manager Platinum’s quarterly results, released last week.
Having benefitted from patience and conviction, the end result for the financial year was around 2 per cent in outperformance but still a net negative return. Whether this or a more general risk off sentiment was the driver of the $304 million in outflows during the quarter, we will never know, but the challenge remains.
Writing in their latest quarterly update the group flagged their short positions as being among the biggest contributors to the relative outperformance, though most of these are kept under wraps given the sensitivity. On the opposite side of the portfolio, a long-held preference for China paid off in the final quarter with companies including Trip.com and ZTO Express benefitting from an about face by the Chinese Government.
The group remains wary despite the recent selloff and repricing of risk assets with the net invested position falling from 62 to just 56 per cent short positions cut from 28 back to 20 to “reflect our concerns regarding the impact of rising interest rates on what has been a very speculative stock market”.
In his thought piece, titled “A Garden Variety Correction of Much More?” Co-CIO Clay Smolinski flags the importance of context and considering the recent repricing in comparison to “where we came from” which was a “bubble environment” predicated on the concept that rates would stay lower for a very long time. The risk therefore may be that the current “20 per cent fall is just skimming off the euphoria that was surrounding markets”.
There is a tendency as a value, or any other type of investor for that matter, to “bottom fish” with Smolinski suggesting that while opportunities are becoming more plentiful, they “aren’t as plentiful as you may think” due to the euphoric starting position.
Shifting to the positives and it is clear the focus remains on Asia. The Chinese market “is in a very interesting space” he says, with most indicators suggesting the economy and markets may be bottoming out. There is “clear value in China” but investors are disinterested as they were during the European Debt Crisis. “It feels like things are starting to turn” concluded Smolinski.
But the real action is Japan, after a strong period for the fund with the CIO quoting the old adage “when Japan is looking pretty cheap as a holiday destination due to the yen, you should also think about buying some assets there”. A key driver of this is currency movements in the emerging markets, with a company like Toyota in “an incredibly competitive position” compared to global players.
