According to Perpetual Investments global equities portfolio manager Garry Laurence, rising levels of volatility in global equities caused by shifts in US monetary policy and the slowdown of bond-buying by the European Central Bank will have significant bearing upon investment portfolios.
“A period of historically low interest rates across the globe has led to a repricing of risk and a subsequent inflation of asset values across many markets,” Mr Laurence said.
“With trillions of dollars of bonds now trading at low yields, future shifts in official interest rates have the potential to heavily impact asset valuations.”
However, it remains important to be investing in international shares, he said, with the healthcare sector and the consumer staples sector two areas in which the Perpetual Global Share Fund has “strong exposure”.
While the consumer staples sector has been “expensive in general”, Perpetual has increased the fund’s allocation in this sector to 12 per cent with the purchase of stock in Nomad Foods and Britvic.
“The value of active investing is that even in sectors that may look expensive we can still identify companies like Nomad and Britvic – companies with strong management, solid balance sheets, consistent earnings growth and strong free cash flow,” Mr Laurence said.
Health stocks, too, present “a major investment opportunity” particularly in the long run, despite delayed healthcare reforms and political obstacles.
Mr Laurence said, “While political rhetoric around the Affordable Healthcare Act is likely to fuel increased volatility, any further weakness should be seen as an opportunity to find value in the sector, which is set to benefit from significant structural and demographic tailwinds over the longer term.”
