Equity investors should devote themselves to specific companies rather than get caught up in macroeconomic trends, says Nikko Asset Management.
Speaking to InvestorDaily, Nikko Asset Management head of global equities Will Low said there had been a “reappraisal of more cyclical businesses” in markets recently as investors shift from building portfolios for capital protection.
“In the middle of last year the dispersion between the valuations that people were paying for what we call bond proxies, safe-yielding businesses, vs more cyclical ones was possibly the most stretched it’s been for any significant period,” he said.
“The net result is that we’ve had possibly the most episodic rotational bouts of belief in growth, and therefore reappraisal of value.”
Mr Low said stock picking was critical to generating returns, and that there would be many individual winners and losers within different sectors “rather than something specifically sectoral”.
“We would suggest buying quality businesses that can sustain and grow the cash flows and are also valued at a sensible price – That’s always been the bedrock of your return,” he said.
Additionally, Mr Low said investors should “obsess less” about deploying assets around the outcomes of political events such as elections, noting that they are “relatively difficult to predict”.
“You’re better off focusing on investments where their growth, cash flows, and potential returns are driven by what the individual businesses can do, rather than being wholly beholden to the ability of either politicians or cheap debt to engender growth,” he said.
Goldman Sachs’ recent $1 billion acquisition of United Capital marks the beginning of a new M&A boom for the wealth management industr...
Westpac’s chairman has made a series of apologies to the bank’s shareholders in a statement to the ASX accompanying the interim divide...
An executive board member of APRA has told delegates that failing to take action on climate change now will lead to much higher economic co...