Virginie Maisonneuve, Eastpsring Investments
“This year will be much more volatile, so there are two things you need to do: Always go back to valuations and be much more tactical this year even if you are a long-term investor,” she said at a media briefing in Hong Kong yesterday.
Investors saw very little market volatility last year. Ben Dunn, head of the firm’s quantitative solutions group, said in a report that since January 2017, major global and regional equity markets have seen positive returns in nearly every calendar month with a few minor drawdowns of 1% or less in some regions.
However, this year will be different, said Maisoneuve, as investors fear that the Fed might “overshoot rates”. She added: “We also have new leaders at the central bank in the US, and we are going to have new leaders in Europe as well. There’s a lot of uncertainty.”
Equity markets globally already saw a sign of increased volatility with a market correction earlier this year. In particular, the S&P 500 went down 6% to 2,648.94 on 5 February from 2,821.98 on 1 February, according to Bloomberg data.
Eastspring intends to take relative bets amid this more volatile environment. For example, for its multi-asset products, the firm trimmed down some of its emerging market equity exposure and allocated to the US when markets were down earlier this year, Maisonneuve said.
“We were very overweight emerging markets and we are very underweight the US. But we are not changing the direction [of our strategic view], we’re just amending a little bit the size of the bet.”
Maisonneuve is not alone in seeing the recent market correction as a buying opportunity.
Tai Hui, chief marketing strategist for Asia-Pacific at JP Morgan Asset Management, described the recent sell-off as a “healthy correction”.
“Given that our positive view on underlying fundamentals remains unchanged, that we see little risk of recession and that earnings expectations remain strong, we would view this as a buying opportunity,” he said in a statement.
Yee Kok Wei, portfolio manager at Fidelity International, shared the same view.
“The unusual plunge in the US markets [on 5 February] and the similar Nikkei decline might present a good dip-buying opportunity for investors,” he said in a statement. “The overall economic environment remains robust and corporate earnings reported thus far have been good.”
In spite of the expected volatility in equity markets, Maisonneuve favours equities over fixed income.
“We are still overweight equities [in our multi-asset products],” she said.
“The message is that the fundamental picture for the market is still very strong. You are in a world of a synchronised, broad recovery, and this is the first time we are seeing this in many years.”
Performance of the Eastspring Global Multi Asset Income Plus Growth Fund
Source: FE. Data from the date of fund launch. The fund’s benchmark is 50% MSCI AC World Index and 50% JPM Global Aggregate Bond Index.
Note: All fund and index NAVs are converted to US dollars for comparison purposes. The fund is authorised for retail sale in Singapore and available to professional investors only in Hong Kong.
