Most people’s experience of artificial intelligence has been the chatbot: ask a question, get an answer. That use is still growing. What is changing—and what matters for Contrarius’ Funds—is the next layer of demand.
Most people’s experience of artificial intelligence has been the chatbot: ask a question, get an answer. That use is still growing. What is changing—and what matters for Contrarius’ Funds—is the next layer of demand.
One of the longer term criticisms of the active fund management industry is its chronic underinvestment in product research and innovation. But time catches up with all of us. There was only so long active fund managers were going to avoid investing in products which match up with modern day investors’ needs and expectations.
Sustainable investment strategies such as ESG and impact investing have been through a challenging couple of years with recent performance headwinds translating into a slowdown in funds under management growth momentum.
If you’ve notice the growing popularity of managed funds of late, you aren’t alone. After a challenging couple of years, Australia’s managed fund sector resumed growing its funds under management around eighteen months ago. The recent rally in global equity markets is clearly a key driver.
Better treating chronic disease has long been a core objective for the global medtech sector. Whilst steady progress in that direction has the name of the game for decades, the medtech sector appears to be at an inflection point with a secular improvement in treatment standards occurring in recent years. Less-young investors (I’m being polite) will remember a similar feeling in the global technology sector back in 1995, during the early stages of the tech boom.
Most investors currently lack exposure to emerging markets after a generally challenging decade for the asset class prior to 2023. However, over the past year the emerging markets narrative has improved for some structurally-attractive emerging market countries where stock market momentum continues to build.
The fastest rate rising cycle in history was always going to test the commercial property fund sector. With typical loan to value ratios of 40-70%, it’s an asset class which is at the mercy of the RBA’s cash rate decisions. As such, investors tend to be bullish on commercial property funds when rates are falling, but rising rates generally spell bearish sentiment.
It’s been a torrid couple of years for ASX smaller companies with most investors turning their backs on the asset class like the plague. The extent of their recent disfavour has been hard to fathom given the positive trend in equities since the pandemic.
This raises the question: is now the right time to revisit small and micro caps whilst others remain fearful? To answer that, we’ll need to delve into the reasons for the recent underperformance for a steer as to what’s coming next…
You may have noticed you’re hearing more about private debt (also known as private credit) as an asset class these days. You’re not imagining it. Private debt is booming as an asset class. Preqin estimates the sector’s assets under management will grow from US$1.5 trillion in 2022 to US$2.8 trillion by 2028, reflecting growing awareness of the sector’s solid income generation credentials.
After the rapid rise in the number of ETFs on offer, investors are faced with more choice than ever when it comes to selecting funds. And with typical managed fund fees running at many multiples of typical ETF fees, investors are increasingly asking the question… is it worth paying the higher fees for an actively managed fund?
Australia has a famously large population of highly qualified fund managers considering the size of the country. According to KPGM, Australia’s 647 fund management groups manage $4.3 trillion across 6,451 products. That represents around $170k under management for each and every Australian resident, so it’s a sizeable portion of the nation’s wealth. This translates into opportunity for individual investors who know what to look for in the vast smorgasbord of fund management options at their disposal.
Picking the right fund manager to manage your assets is arguably an underrated and under-discussed process which is as complex as stock picking. As with all financial decisions, it’s important to ensure your fund managers’ strategy and process aligns with your risk appetite, return objectives, and time horizon.
You’ll also want your fund managers to have conviction in what they’re doing. On that front, there’s one question investors you can ask prospective fund managers which reveals their genuine conviction level above all other questions… do you have skin in the game?
It’s long been recognised that stock markets have a habit of making intelligent people look stupid.
The fundamental reason is simple but often ignored… share price movements can be wild and unpredictable, and often confound investor’s expectations. And yet, with investors increasingly watching their stock price movements like hawks the temptation to account for unexpected stock moves with rational explanations often leads to sub-optimal results.