POWERED BY MOMENTUM MEDIA
Investors still chasing yield despite growth opportunities
"Post-traumatic stress syndrome" following the global financial crisis (GFC) has created some of the best buying opportunities since the tech bubble of the 1990s, according to Southeastern Asset Management chief executive Mason Hawkins.
Hawkins said US$1.3 trillion had flowed from mutual funds to bonds since 2007.*
He said the earnings potential of equities versus bonds were much higher - there were only two other times in the last 60 years when the spread of forward reward-to-owning versus return-to-lending favoured stocks were as high as they are currently.
Within equity, investors were now seeking comfort and yield from familiar brand names due to a focus on yield, Hawkins said.
"People are willing to pay for 'quality' where we would think much better companies are much better competitively entrenched," he said.
Oligopolies and duopolies - which were indispensible to growth but suffered from some exposure or volatility - were extremely discounted right now, he said, but investors shied away because of a focus on yield.
"It's a time horizon arbitrage, you're arbitraging perception to reality and people are so short-term oriented right now. They're thinking in the next two months, quarter. It's just not how you make good long-term money," he said.
* Correction: The original version of this story incorrectly stated that US$2.3 trillion had flowed from mutual funds to bonds since 2007.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Economic growth was weaker than expected, once again highlighting an economy largely sustained by population growth and government spending.
In this latest edition, Anna Shelley, CIO at AMP, shares the fund’s approach to current market conditions and where it continues to uncover key opportunities.
The mega fund has announced a $2.2 billion investment in a leading data centre platform, bringing its global real assets portfolio to nearly $60 billion.
In this latest edition, Australian Retirement Trust’s head of global real assets Michael Weaver explains the fund’s approach to finding new opportunities as it surpasses $300 billion in funds under management.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
90.28 3 y p.a(%)
2
GAM LSA Private Shares AU I
37.08 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.44 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.12 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
28.28 3 y p.a(%)
