36ONE Asset Management’s highly skilled team is renowned for its top performing unit trusts, hedge funds and private client portfolios. They have recently published two articles outlining their market views which we thought you would find interesting. To view the full articles, please visit our website (click here).
What could be driving record market levels?
- The peak the market reached in 2008 (pre the crash) was surpassed in January this year.
- Why is the market at an all time high, despite the news being full of negative sentiment?
- How do peak levels coincide with a subdued global outlook?
- If markets are forward looking this means investors have positive expectations.
- However, these positive expectations are not widespread across the whole market – industrials have been the major contributors, whereas resources and financials have been restrained.
- The subdued global outlook itself is partly responsible for these market levels: investors are paying high prices not necessarily because they see value, but because other opportunities have dried up. The race is on to find assets with good returns.
- Being aware of this phenomenon, we will understand that if a star performer starts to wane when global markets recover, this is most likely attributable to its relative attractiveness decreasing as other assets start to recover.
Hedge Funds – not so scary after all
- The hedge fund industry is expected to grow strongly in the next few years as a result of regulatory changes, increased awareness of the industry, nervous equity markets and the current low interest rate environment.
- The relatively small size of the hedge fund industry (compared to the traditional savings and investment industry) is an indication of the enormous potential for the hedge fund industry to expand.
- Important considerations when investing in hedge funds:
- Philosophy, Process & People – You should invest money only with people who you trust, and if you are comfortable with the manager’s philosophy and investment process.
- Only invest via limited liability structures to limit the risk to the amount invested.
- Track-records matter – stick to those hedge fund managers with at least a three year track-record that exhibits above-average investment skill.
- Ensure that the incentives of the manager and the investor are aligned by examining the manager’s method of remuneration.
For more information on 36ONE’s funds, visit us at www.investonline.co.za or email your questions to info@investonline.co.za.
