|
 |
Home
>> News >>
Current News |
|
| |
| Current News |
|
|
How did the political turmoil that the country experienced earlier this year affect the equity market? FRED MBURU, Old Mutual’s Head of Portfolio Management, explains…
The first quarter of 2008 was a very trying period for stock market investors. It tested the limits, nerve and patience of even the most seasoned investor. Amidst the political turmoil and violence the stock market plunged and some investors fled in droves.
As the old adage goes, markets are a barometer of confidence; as the confidence slipped day by day so did the markets. At the height of uncertainty, the stock market had lost 18 percent in value from its 2007 peak. Wealth had been eroded significantly and it took a brave long-term investor to see opportunity when others saw doom
The ability to see this opportunity takes strict discipline in investing and focus on the goal rather than short-term opportunistic trading. At Old Mutual we describe ourselves as fundamental value investors. Put simply, we trade markets and securities based on well grounded research and fundamentals.
At times this may mean taking a contrarian view to the rest of the market on a specific stock or sector. If the facts and our model reflect undervaluation vis a vis prevailing price, we will buy and if it reflects an overvaluation we will sell. What informs this are the twin principles of sustainability and growth momentum, which in turn dictate medium to long-term value opportunity.
Our investment modelling of client monies is based on the diversification principle. While it is in most instances client purpose-driven, we believe that one cannot talk about returns without considering risks associated with specific anticipated or actual returns. This must also be looked at in the context of anticipated investment duration.
For long-term funds such as Life Assurance monies and Pension Funds it is generally accepted that liabilities fall due in the long term and therefore the need to invest in assets that will potentially deliver superior long-term growth.
For individual/family monies our investment positioning is largely based on individual appetite and tolerance for risk.
With regard to historical returns, although these have been as varying as our client profile, they vindicate our long-term value philosophy. On a three-year basis we have outperformed (a) set benchmarks, (b) against independent surveys and equally important(c) inflation.
In the short term i.e. 12 months returns appear to lag primarily on account of recent stock market volatility. |
| |
|
|
|
