Speaking to InvestorDaily, Van Eck Australia managing director Arian Neiron said investing in quality companies is needed to mitigate the risks associated with a low growth environment.
Mr Neiron said quality companies are more defensive in multiple environments and exhibit better performance and better downside risk in the face of volatility.
“We don’t know how long this economic environment will transpire for, but typically quality companies do perform better and you do want to invest in companies that have less leverage in this type of environment,” he said.
“Quality companies have more durable business models and they really survive all the different economic cycles.
“If we look at quality stocks over time, they outperform over time,” he said.
Mr Neiron added that investors should look to exchange-traded funds (ETFs) to build their portfolios and capitalise on structural changes within the market.
He marked Australia’s move away from a commodity-based economy and China’s move towards a services-led economy as trends that investors should look to capitalise on.
Moreover, Mr Neiron said investors can bring in an absolute return focused fund manager to complement their ETFs.
“[Investors] can sort of have the best of both worlds, have the control but also outsource where they can’t generate the same ideas and have conviction around the strategy,” he said.
