Aussie investors are being told to turn their attention to long-term sustainable earnings growth over short-term disruptions, and to stop fearing uncertainty.
With the sudden emergence of the Omicron COVID-19 variant, investors are being advised to take a long-term view that allows for flexibility.
Speaking at a recent SG Hiscock and Co media briefing, portfolio manager, Hamish Tadgell, warned of the dangers an “over-reliance on models” can have.
Investors, he said, “need to be able to adapt to change and take advantage of emerging trends such as the seismic shifts underway in decarbonisation and social infrastructure”.
Touching on heightened inflation risk, Mr Tadgell said that while it’s hard to predict if the current pressures will be more structural in nature, “there is little question in our mind the inflation risk has increased with the COVID shock and unprecedented fiscal intervention”.
“We need to think about how to position the portfolio in the face of heightened inflation risk,” he said.
“Long-term secular forces are important drivers of future returns, but we think it is important to have a barbell approach to manage the short-term forces and uncertainty.
“Identifying quality stocks with sustainable earnings growth is key in this environment. Some areas of likely growth include social infrastructure, decarbonisation and national security,” Mr Tadgell opined.
Joining him is Grant Berry, AREIT portfolio manager, who explained that the trend of longer-term tailwinds can also be identified in listed real estate investments.
Noting a major role broader business and consumer conditions play in how the office and retail property sectors perform, Mr Berry said that while uncertainty will persist, fear should not.
“For 2022, the overarching message is that investors should be prepared to deal with ongoing uncertainty, but they shouldn’t fear this.
“Instead, they should be on the lookout for the quality investment opportunities that will inevitably arise,” Mr Berry said.
Mr Tadgell agreed, adding: “If we can manage risk, we can not only live with uncertainty but paradoxically enjoy it!"
"Uncertainty forces change, new ways of doing things, ingenuity, entrepreneurship. It is fundamental to an understanding of social, technological and economic progress.”
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
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