Join Chris Metcalfe, our CIO, as he discusses current market trends and investment strategies with Rory Palmer at Asset TV. From reinvigorated emerging markets to navigating the complexities of active versus passive management, Metcalfe offers insights into seizing opportunities and managing risks in today’s dynamic investment landscape.
Transcript Summary:
Rory: Joining me today in the studio is Chris Metcalfe, Chief Investment Officer at IBOSS Asset Management. Welcome, Chris.
Chris: Thank you, Rory. It’s nice to be here.
Rory: Chris, as you survey the global market landscape, what trends or opportunities are you currently observing?
Chris: Currently, we’re identifying a lot of opportunities, though not necessarily in the areas that have dominated headlines in recent years, such as the major U.S. tech and growth sectors. We’re finding potential in less traditional areas.
Rory: In terms of equities and bonds, where do you see these opportunities?
Chris: We see potential broadly across the market. Particularly, we’re optimistic about the equity markets in Asia and emerging markets, like Latin America, which we believe will benefit from a continuing commodities boom. While it might not be a Supercycle, there are strong tailwinds for commodities that will likely support these regions. In Asia, especially in India and China, opportunities are abundant.
Rory: Have you reduced your investments in Chinese equities recently?
Chris: We’ve slightly decreased our exposure to Chinese equities, but we remain bullish. Our strategy has evolved from investing in China-specific funds to leveraging active managers in the broader Asian market, which allows for more agility in our investments.
Rory: Speaking of India, what prospects do you see there?
Chris: India is intriguing, particularly because of its favourable demographic trends and the vibrancy of its tech sector. However, the valuation often comes into question, although this concern isn’t as prevalent in U.S. markets. For us, it’s not a choice between India or China; we see value in investing in both, recognizing their unique advantages and governmental contexts.
Rory: Is the current valuation of Indian markets a concern for you?
Chris: Certain sectors do seem overvalued, but overall, we find the U.S. market, where we hold our largest regional equity allocation at 27%, to still offer compelling opportunities. We focus on the overall strength of the U.S. economy rather than individual stocks that may be in a bubble.
Rory: You mentioned not fully understanding how to value AI stocks. Could you expand on that?
Chris: Just as with internet stocks in 1999, the potential ceiling for AI companies is high, but so is the risk. We prefer to leave specific investments in such areas to specialized active managers, like those managing the Rathbone Global Opportunities Fund, who have the expertise to navigate these complexities.
Rory: Considering your U.S. equity holdings are underweight relative to your peers, is this a strategic choice?
Chris: Absolutely. As multi-asset investors, we maintain a commitment to diversification, which is a core principle for us. While some investors might pursue higher returns by concentrating investments, we aim to manage risk through a well-diversified portfolio.
Rory: How do you respond to clients during volatile market periods?
Chris: Market downturns often shift client interactions from investment recommendations to seeking reassurance. We remind clients of the cyclical nature of markets, pointing out that sectors like the U.S. market have had periods of underperformance, which are often overlooked when times are good.
Rory: Reflecting on the 15 years since IBOSS was founded, what key insights have you gained?
Chris: The most significant insight is that market trends are transient and not always black and white. Whether it’s the debate between active and passive management or different investment styles, the best approach often involves discerning when a trend might reverse. This nuanced view helps us adapt and anticipate changes more effectively.
Rory: Finally, Chris, any thoughts on how the current market compares to past periods like 1999 or 2008?
Chris: The current market does remind me of 1999 in terms of the speculative fervour around new technologies like AI. While these innovations will undoubtedly impact the world, identifying the direct beneficiaries in terms of stock performance remains challenging.
Rory: Thank you for sharing your insights, Chris.
Chris: My pleasure, Rory. Thank you.
This communication is designed for informational purposes only and is not intended as investment advice. These investments are not suitable for everyone, and you should obtain expert advice from a professional financial adviser. Please note that the content is based on the author’s opinion at the time of writing/publish date. Our views and opinions regarding certain investment themes and topics can alter over time as the macroeconomic background changes and other industry news is made publicly available, this is not intended as investment advice.
Past performance is not a reliable indicator of future performance. The value of investments and the income derived from them can fall as well as rise, and investors may get back less than they invested.
IBOSS Asset Management Limited is authorised and regulated by the Financial Conduct Authority. Financial Services Register Number 697866.
IBOSS Asset Management Limited is owned by Kingswood Holdings Limited, an AIM Listed company incorporated in Guernsey (registered number: 42316).
Registered Office: 2 Sceptre House, Hornbeam Square North, Harrogate, HG2 8PB. Registered in England No: 6427223.
