Quality will prevail in 2016, says Hyperion

Investors who are feeling jittery about stock market volatility should focus on quality stocks and invest for the long term, says Hyperion Investment Management.

Hyperion Investment Management managing director Tim Samway claims to be “calm and sanguine” as the firm moves into 2016.

Despite the “bumpy”‘ start to 2016 in equities markets, investors who continue to focus on quality stocks and have a long-term investment horizon have “no cause for concern”, Mr Samway said.

“The fact remains that we have a substantial ageing population of a reasonably wealthy middle class. That spells opportunity,” he said.

“The question for [Hyperion] is, where does that opportunity lie? And the answer is in seeking and predicting much longer-term themes that develop over years and change markets for good, not short term cyclical fluctuations like the volatility of the exchange rate or gyrations in commodity prices.”

Developments such as cloud computing, online fast food ordering and rapid delivery have reshaped whole industries, he said.

“We need to look at what’s disruptive and consider what kinds of new technologies and new business models are going to make a difference to their customers. What will their long-term effects be? And how can investors capitalise on that?

“For example, Technology One is changing its client base from a software sale to an annuity income stream of higher quality by converting its software to the cloud.

“We are confident that over the next five years, economic conditions point to a sustained, albeit low growth market. Make the right decisions now and you will be ready to reap the rewards,” Mr Samway said.