The annual Morningstar conference, held last week in Sydney, is interesting in many ways. Importantly, it marries the three segments of non-institutional fiduciary investments: fund managers, financial planners and individual investors. Perhaps surprisingly, it works.
The one-day conference, held at the International Convention Centre, attracted more than 500 attendees, as it traditionally does, but at least these days the conditions are not as cramped as at previous city venues. The conference seems set to become a major one on the annual investment conference circuit. More than 30 speakers and panelists rose to the occasion across 16 sessions. It was a busy day. One said: “we are in the ‘most hated’ of bull markets”.
Setting the tone in one of the early sessions, Matt Wacher, Morningstar Investment Management’s CIO, said the firm was looking to “smooth out” the glide path for investors. “We think that a lot of valuations are high and we are holding a lot of cash,” he said. “From an Australian-dollar perspective, we have seen some good opportunities over the past few years [as the US dollar firmed versus the Aussie], but we are not seeing so many opportunities now in either the growth assets or in the bond market.”
Nevertheless, he said, there were still opportunities, for example, in emerging markets and, possibly, in the infotech area. Also, Australian telecoms, and consumer staples were producing interesting possibilities, Wacher said.
Hani Redha, the managing director and portfolio manager of the multi-asset team at PineBridge Investments from London, observed that the world was in “mid-cycle” with likely moderate growth that was expected to decline in the future. But he was optimistic about certain pockets of investments.
“We see clear evidence of breaking out of a low funk because of new technologies,” he said. “The evidence is quite clear that growth is positive [in some areas] without signs of overheating. That growth that is ahead of us is better than the growth we have seen for the past few years. This is the ‘most hated’ bull market. We are going through ‘min-cycles’ of growth in the market, but it is all a part of the new structure of markets. A lot of it is being driven by China.”
He said that investors needed to try to get away from the “big building blocks” in the market and seek out the “interesting areas of value”, as well as those areas to be avoided.
Simon Doyle, the head of fixed income and multi-asset strategies at Schroder Australia, said in the same session that part of what the big super funds had done well was to harvest the illiquidity premium from private markets, producing consistently solid performance.
“There are no magic solutions,” he said. “You have to think about what you want your alternatives to do. We are getting into a more difficult environment, with low interest rates, but markets don’t work in straight lines. There are still opportunities. The risk side of the equation will be very important.”
Greg Bright is publisher of Investor Strategy News (Australia)