To mark Valentine's Day, Investment Week asked some fund managers to reflect on some of the investments they are most fond of.
Nick Hayes, portfolio manager at AXA Investment Managers
The first lesson you learn as a fund manager is never fall in love with an investment. However, this does not mean there aren't, from time to time, some clear opportunities that you want to wine and dine. One we are keen on currently is the duration trade. Duration has proven to provide robust returns against risk asset weakness, and we see big demand from central banks and other institutional investors. The fact is quantitative easing is an enormous presence in the market, and it is not going away, so when assets such as treasuries see yields on benchmark bonds move higher (as they are now), we get excited. Central banks, in particular the US Federal Reserve, pumped in huge amounts of stimulus this year, sending yields globally tumbling. The expectation going forward is for lower growth over the next few years as the wide-ranging impact of coronavirus is absorbed by economies. This will feed through to bond markets and keep yields suppressed, so we are a buyer of higher yields.
Christopher Rossbach, manager of the J. Stern & Co. World Stars Global Equity fundDrinks and consumer brands Last year, companies such as Amazon, Alphabet and Facebook pushed global equity markets to all-time highs. As the pandemic shifted economic and social activity online, they helped people to buy what they need and stay in touch with family and friends. But while 2020 was the year of big tech, 2021 will be the year of consumer companies, which have weathered the pandemic and are coiled to perform. The extensive vaccination programmes across Europe and the US have shown the pathway back to normality. Many people have saved by not going out and holidaying. As economies open up they will begin going out and enjoying themselves. We love Diageo and Pernod Ricard (the owners of G.H. Mumm Champagne) – companies which will benefit from reopening of pubs, bars and clubs – or EssilorLuxottica, which will sell more sunglasses as people resume holidaying. We also love luxury maker LVMH which should stand to gain from the pent-up demand for its many brands. All that consumption has to be paid for so payment firms such as Mastercard will benefit from greater volumes and higher margins in hospitality and travel spending.
James Burns, co-manager of the Smith & Williamson MM Global Investment fundProperty Property assets at a discount to net asset value have always interested me because they are tangible assets that the market puts too high or low a price on, presenting an opportunity.
Covid has caused a dislocation between the price of many property companies and their asset values. But is the impairment of these assets permanent or is the market being short-sighted? One company that interests me, and which we hold in the Smith & Williamson MM Global Investment Fund, is CEIBA Investments, managed by Aberdeen Standard Investments. The largest listed foreign company investing in Cuba, it has a portfolio of an office asset in Havana, four operational hotels and one in construction.
The attraction is that two factors that have hit CEIBA the hardest in recent years, Covid and the US-Cuban embargo, should have less of a negative impact in 2021. President Joe Biden's administration should reverse many of his predecessor's policies, potentially with a full reversal of sanctions and embargoes. With a current asset value that factors in the worst of the pandemic and Donald Trump, as well as an attractive discount to NAV, this could be an interesting long-term investment.
Malcolm McPartlin, co-manager of the Aegon Global Sustainable Equity fundClean energy and healthcare companies We love investing in companies that are truly changing the world. Companies that are making peoples' lives better. Clean energy companies that are at the forefront of the fight against climate change, healthcare companies that are rapidly developing treatments for horrible diseases such as cancer, technology companies that are helping make society a safer more inclusive place.
We love searching below the radar for those undiscovered growth companies that are set to disrupt the status quo. We love engaging with companies to help them improve their sustainable credentials and become better corporate citizens.
We love that the investment community is embracing sustainable investing and we are seeing a strong pick up in interest.
And we love the fact we can generate strong returns for our clients while improving the world.
We love sustainable investing.
The weather may be cold, but there are some stocks raising the temperature for some investors.
The weather may be cold, but there are some stocks raising the temperature for some investors. Ahead of Valentine's Day this Sunday, Investment Week asked fund managers to reflect on some of the investments...