A global fund manager has suggested the most prudent way to manage an investment portfolio in the wake of the severe market volatility triggered by the coronavirus is to take a long-term approach.
“The only way to navigate these periods with sanity and resilience is to have a very long-term view. Those who understand compound interest, earn it; those who don’t, pay it. Those who have the temperament, mindset and patience to invest countercyclically over the long term do the best,” Tollymore Investment Partners managing partner Mark Walker said.
Walker emphasised the importance of having the discipline during this period of intense market volatility to make investment decisions using factual information.
“Future investment decisions should be made on data, not emotions. The median market performance two years after a correction is 45 per cent. This alone statistically suggests investing into corrections is how long-term investors perform better than macro traders and market speculators,” he noted.
He also warned investors looking to purchase stocks that might currently be undervalued not to expect they can accurately pick the bottom of the cycle.
“It does not mean that if you invest today the market will not go down further and if the market declines further it does not mean investing today was the wrong thing to do. [It’s about] process versus outcomes. It just means you didn’t pick the bottom. Trying to pick the bottom is a tiny return-on-investment game to play,” he said.
With regard to the manager’s own investment approach, he revealed the types of company Tollymore Investment Partners is currently favouring.
“So far this year we have been purchasing more shares of smaller, less liquid companies where there may have been non-fundamental selling pressures exaggerating stock price declines,” he said.
Elsewhere, another fund manager has pointed to resources, technology and travel as the sectors likely to recovery first after the corona-virus pandemic has finished impacting financial markets.